Jhaveri v Salgaocar: Caveat Removal, Reverse Piercing & Corporate Veil

In Jhaveri Darsan Jitendra and others v Salgaocar Anil Vassudeva and others, the High Court of Singapore heard Originating Summonses Nos 727 and 945 of 2015 on January 31, 2018, regarding the removal of caveats lodged by Salgaocar against properties owned by the plaintiffs. The plaintiffs, Jhaveri Darsan Jitendra and others, sought the removal of these caveats under the Land Titles Act. The court allowed the plaintiffs' applications, finding that Salgaocar's claim to an interest in the properties did not raise a serious question to be tried. The court rejected arguments for reverse piercing and lifting the corporate veil.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Applications in OS 727 and OS 945 allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court removes caveats, rejecting reverse piercing and lifting the corporate veil arguments. The case centered on beneficial ownership claims.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Capital Glory Investments Pte LtdPlaintiffCorporationApplication AllowedWon
Newton Noble Properties Pte LtdPlaintiffCorporationApplication AllowedWon
Sino Noble Asset Management Pte LtdPlaintiffCorporationApplication AllowedWon
Lakshmi Anil SalgaocarDefendantIndividualApplication AllowedLost
Jhaveri Darsan JitendraPlaintiffIndividualApplication AllowedWon
Jhaveri Jashma DarsanPlaintiffIndividualApplication AllowedWon
Salgaocar Anil VassudevaDefendantIndividualApplication AllowedLost
Chandana Anil SalgaocarDefendantIndividualApplication AllowedLost
Sameer Anil SalgaocarDefendantIndividualApplication AllowedLost
Poornima Anil SalgaocarDefendantIndividualApplication AllowedLost
Arjun Anil SalgaocarDefendantIndividualApplication AllowedLost

3. Judges

Judge NameTitleDelivered Judgment
Kannan RameshJudgeYes

4. Counsels

Counsel NameOrganization
Ang Cheng HockAllen & Gledhill LLP
Ramesh Kumar s/o RamasamyAllen & Gledhill LLP
Koh Zhen-Xi, BenjaminAllen & Gledhill LLP
Soon Shao Wei, JeraldAllen & Gledhill LLP
Kanapathi Pillai NirumalanNiru & Co LLC
Liew Teck HuatNiru & Co LLC
Dafril Phua IzzadNiru & Co LLC

4. Facts

  1. Salgaocar lodged caveats against properties owned by the plaintiffs.
  2. The plaintiffs applied for the removal of the caveats.
  3. Salgaocar claimed a beneficial interest in the properties based on the December 2003 Agreement.
  4. The December 2003 Agreement stipulated that Darsan would hold shares in SPVs on trust for Salgaocar.
  5. The properties in question were owned by Singapore-incorporated companies (the Companies).
  6. Salgaocar sought a declaration that Darsan held the properties on trust for him.
  7. The court found that Salgaocar's claim was based on his alleged beneficial ownership of shares in the SPVs, not direct ownership of the properties.

5. Formal Citations

  1. Jhaveri Darsan Jitendra and others v Salgaocar Anil Vassudeva and others, , [2018] SGHC 24

6. Timeline

DateEvent
December 2003 Agreement reached in Hong Kong.
Salgaocar procured Salgaocar Mining Industries to sell iron ore to BVI SPVs.
Salgaocar lodged the Caveats.
Plaintiffs in OS 727 instituted OS 727, applying for the removal of the caveats.
Salgaocar commenced Suit No 821 of 2015 against Darsan.
Companies commenced OS 945, applying for the removal of the caveats.
Darsan applied to strike out Suit 821.
Salgaocar passed away.
Plaintiffs obtained an order that Salgaocar’s widow and four children be joined as parties to OS 727 and OS 945.
Pre-trial conference for Suit 821.
Lakshmi applied to stay OS 727 and OS 945 pending the determination of the FJC Action.
Court directed Lakshmi and Chandana to each file an affidavit in relation to the FJC Action within two weeks.
Lakshmi and Chandana sought permission not to file the pleadings in the FJC Action.
Parties appeared before the court; counsel for Lakshmi and Chandana explained that they were on the brink of settling their alleged dispute in the FJC Action after mediation.
Parties appeared before the court once more and further directions were made.
Lakshmi applied for OS 727 and OS 945 to be consolidated with Suit 821.
Lakshmi was appointed the sole administratrix of the estate of Salgaocar.
Court allowed Lakshmi’s application to withdraw her application to stay OS 727 and OS 945.
Court allowed the plaintiffs’ applications in OS 727 and OS 945 and delivered detailed oral grounds.
Full grounds of decision delivered.

7. Legal Issues

  1. Removal of Caveats
    • Outcome: The court allowed the plaintiffs' applications for the removal of the caveats.
    • Category: Substantive
    • Related Cases:
      • [2006] 3 SLR(R) 881
      • [1980] AC 331
  2. Reverse Piercing
    • Outcome: The court did not accept the Reverse Piercing Argument.
    • Category: Substantive
    • Related Cases:
      • [2015] SGHC 52
      • [1962] 2 QB 593
      • 302 NW 2d 350 (Minn, 1981)
      • 375 NW 2d 477 (Minn, 1985)
  3. Lifting the Corporate Veil
    • Outcome: The court did not accept the Lifting the Veil Argument.
    • Category: Substantive
    • Related Cases:
      • [2013] 2 AC 415
      • [1897] AC 22
      • [2017] 2 SLR 592
      • [1925] AC 619
      • [2006] 4 SLR(R) 210
      • [2009] 3 SLR(R) 452
      • [2017] 4 SLR 1124
      • [2009] 1 SLR(R) 524
      • [1933] Ch 935
      • [1962] 1 WLR 832
  4. Separate Legal Personality
    • Outcome: The court found that the principle of separate legal personality created serious difficulties for Salgaocar’s claim to an interest in the Properties.
    • Category: Substantive
    • Related Cases:
      • [1897] AC 22
      • [2017] 2 SLR 592
      • [1925] AC 619
      • [2006] 4 SLR(R) 210
      • [2009] 3 SLR(R) 452
      • [2017] 4 SLR 1124

8. Remedies Sought

  1. Removal of Caveats
  2. Declaration of Trust
  3. Order to Convey Properties

9. Cause of Actions

  • No cause of actions

10. Practice Areas

  • Caveats
  • Corporate Law
  • Reverse Piercing
  • Lifting the Corporate Veil

11. Industries

  • Real Estate
  • Mining

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tan Yow Kon v Tan Swat Ping and othersHigh CourtYes[2006] 3 SLR(R) 881SingaporeCited for the principles governing the removal of caveats.
Eng Mee Yong and Others v V Letchumanan s/o VelayuthamPrivy CouncilYes[1980] AC 331MalaysiaCited for the two requirements a caveator must meet to maintain a caveat: establishing a serious question to be tried and demonstrating that the balance of convenience favors maintaining the caveat.
Foster v DriscollKing's Bench DivisionYes[1929] 1 KB 470England and WalesCited regarding the enforceability of agreements contrary to foreign laws; the court did not express a view on this issue.
Salomon v Salomon & Company, LimitedHouse of LordsYes[1897] AC 22England and WalesCited for establishing the fundamental principle that a company is a separate legal person from its shareholders.
Goh Chan Peng and others v Beyonics Technology Ltd and another and another appealCourt of AppealYes[2017] 2 SLR 592SingaporeCited for reaffirming the principle of separate legal personality in Singapore law.
Macaura v Northern Assurance Company, Limited, and OthersHouse of LordsYes[1925] AC 619England and WalesCited for the principle that a shareholder of a company does not own the company’s assets.
Public Prosecutor v Lew Syn Pau and anotherHigh CourtYes[2006] 4 SLR(R) 210SingaporeCited for endorsing the principle that the owner of a company does not own the company’s assets.
Beckkett Pte Ltd v Deutsche Bank AG and another and another appealCourt of AppealYes[2009] 3 SLR(R) 452SingaporeCited for applying the principle in Macaura that a shareholder of a company does not own its assets.
Lakshmi Anil Salgaocar v Vivek Sudarshan KhabyaHigh CourtYes[2017] 4 SLR 1124SingaporeCited for recognizing and applying the principle that a shareholder of a company does not own its assets, and for involving similar issues and parties as the present case.
Prest v Petrodel Resources Ltd and othersUK Supreme CourtYes[2013] 2 AC 415United KingdomCited by counsel for Lakshmi, but distinguished by the court due to differing facts, particularly regarding the funding and purpose of asset acquisition.
Children’s Media Ltd and others v Singapore Tourism BoardCourt of AppealYes[2009] 1 SLR(R) 524SingaporeCited as authority that the courts will allow standard piercing in appropriate cases.
Gilford Motor Co Ltd v HorneCourt of AppealYes[1933] Ch 935England and WalesCited as a classic case of outsider reverse piercing.
Jones v LipmanHigh CourtYes[1962] 1 WLR 832England and WalesCited as a classic case of outsider reverse piercing.
Koh Kim Teck v Credit Suisse AG, Singapore BranchHigh CourtYes[2015] SGHC 52SingaporeCited by Mr Liew, but the court considered that it did not support the Reverse Piercing Argument.
Tunstall v SteigmannCourt of AppealYes[1962] 2 QB 593England and WalesCited for rejecting an insider reverse piercing claim.
Adams v CapeCourt of AppealYes[1990] Ch 433England and WalesCited for implicitly rejecting the single economic entity theory and reaffirming the separate legal personality of subsidiary companies in corporate groups.
DHN Food Distributors Ltd v Tower Hamlets London Borough CouncilCourt of AppealYes[1976] 1 WLR 852England and WalesCited by the defendants in support of its submission on reverse piercing, but the court noted that the single economic entity theory was implicitly rejected by the Court of Appeal in Adams v Cape and has now been rejected by the Singapore Court of Appeal in Beyonics.
Beckett Investment Management Group Ltd and others v Hall and othersCourt of AppealYes[2007] ICR 1539England and WalesCited by the defendants in support of its submission on reverse piercing, but the court considered that it did not involve disregard of the separate legal personality of the parent and subsidiaries companies, but simply turned on a broad interpretation of the covenant in the employment contract.
Beverly Roepke et al v Western National Mutual Insurance CompanySupreme Court of MinnesotaYes302 NW 2d 350 (Minn, 1981)United StatesCited by the defendants in support of its submission on reverse piercing, but the court considered that it would not be appropriate to allow an insider reverse piercing claim here on the basis of those cases.
Cargill Inc v Sam Hedge and Hedge Farm Inc and Annette G HedgeSupreme Court of MinnesotaYes375 NW 2d 477 (Minn, 1985)United StatesCited by the defendants in support of its submission on reverse piercing, but the court considered that it would not be appropriate to allow an insider reverse piercing claim here on the basis of those cases.
Mahadevan & Anor v PatelFederal CourtYes[1975] 2 MLJ 207MalaysiaCited by Mr Liew, but the court considered that it did not assist Mr Liew.
Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors and another appealFederal CourtYes[1995] 2 MLJ 770MalaysiaCited by Mr Liew, but the court considered that it did not support the Shareholding Argument.
Natsafe (M) Sdn Bhd v Loi Teak KuongHigh CourtYes[2005] 6 MLJ 454MalaysiaCited for the principle that a shareholder does not have a caveatable interest in land owned by a company he holds shares in simply by virtue of his shareholding.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Land Titles ActSingapore
s 127(1) of the Land Titles ActSingapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore
O 21 r 2(6) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore
Housing Developers (Control and Licensing Act) (Cap 130, 1985 Rev Ed)Singapore
Companies Act 1965Malaysia

15. Key Terms and Keywords

15.1 Key Terms

  • Caveat
  • Reverse Piercing
  • Lifting the Corporate Veil
  • Separate Legal Personality
  • Beneficial Ownership
  • Trust
  • SPV
  • December 2003 Agreement
  • Land Titles Act

15.2 Keywords

  • caveat
  • reverse piercing
  • corporate veil
  • land
  • companies
  • trust
  • Singapore

17. Areas of Law

Area NameRelevance Score
Company Law85
Property Law70
Trust Law65
Reverse Piercing50
Civil Procedure40
Contract Law30
Commercial Disputes25

16. Subjects

  • Land Law
  • Company Law
  • Trusts
  • Civil Procedure