Poondy Radhakrishnan v Sivapiragasam: Derivative Action for Breach of Fiduciary Duties
Poondy Radhakrishnan and Visvalingam Naidu applied to the High Court of Singapore under s 216A of the Companies Act for leave to bring a derivative action on behalf of Megatech System & Management Pte Ltd against Sivapiragasam s/o Veerasingam, alleging breach of fiduciary duties. The High Court, presided over by Belinda Ang Saw Ean J, allowed the application, finding a prima facie case that Sivapiragasam had breached his duties. The court reasoned that allowing the action would be in the company's interest by potentially recovering misappropriated funds.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court allowed Poondy Radhakrishnan's application for leave to bring a derivative action against Sivapiragasam for breach of fiduciary duties as director.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Poondy Radhakrishnan | Plaintiff | Individual | Application Allowed | Won | Manimaran Arumugam |
| Visvalingam Naidu s/o Munisamy | Plaintiff | Individual | Application Allowed | Won | Manimaran Arumugam |
| Sivapiragasam s/o Veerasingam | Defendant | Individual | Application Allowed | Lost | B Ganeshamoorthy |
| Megatech System & Management Pte Ltd | Defendant | Corporation | Neutral | Neutral | B Ganeshamoorthy |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Manimaran Arumugam | Mani & Partners |
| B Ganeshamoorthy | Colin Ng & Partners LLP |
4. Facts
- Sivapiragasam was the managing director of Megatech System.
- Plaintiffs were minority shareholders and former directors of Megatech System.
- Plaintiffs alleged Sivapiragasam diverted recruitment fees and renewal fees for personal use.
- Plaintiffs alleged Sivapiragasam improperly deducted foreign worker levy from wages.
- Plaintiffs alleged Sivapiragasam made purported loans to create company indebtedness.
- Megatech System discontinued its security guard services business.
- Plaintiffs were removed as directors of Megatech System.
5. Formal Citations
- Poondy Radhakrishnan and Another v Sivapiragasam s/o Veerasingam and Another, OS 904/2008, [2009] SGHC 228
6. Timeline
| Date | Event |
|---|---|
| Megatech System was incorporated | |
| Plaintiffs appointed as directors | |
| Megatech Marine Engineering Pte Ltd was incorporated | |
| Rajasingam appointed as a director of Megatech System | |
| First plaintiff's employment terminated | |
| Application filed | |
| Plaintiffs removed as directors of Megatech System | |
| Application allowed | |
| Decision Date |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found a prima facie case of breach of fiduciary duty.
- Category: Substantive
- Sub-Issues:
- Diversion of recruitment fees
- Improper deduction of foreign worker levy
- False loans to company
- Derivative Action
- Outcome: The court allowed the plaintiffs' application for leave to bring a derivative action.
- Category: Procedural
- Related Cases:
- [1999] 1 SLR 434
- [2002] 2 SLR 198
- [2004] 3 SLR 1
8. Remedies Sought
- Leave to bring a derivative action
9. Cause of Actions
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Shipyard
- Security
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Teo Gek Luang v Ng Ai Tong | High Court | Yes | [1999] 1 SLR 434 | Singapore | Cited to define the requirement that the action to be brought should appear to be prima facie in the interests of the company. |
| Agus Irawan v Toh Teck Chye | High Court | Yes | [2002] 2 SLR 198 | Singapore | Cited for the interpretation of 'legitimate' and 'arguable' in the context of derivative actions. |
| Pang Yong Hock v PKS Contracts Services | Court of Appeal | Yes | [2004] 3 SLR 1 | Singapore | Cited for the demonstration of good faith in derivative action applications and the burden of proof. |
| Australian Agricultural Co v Oatmont Pty Ltd | Court of Appeal of the Supreme Court of the Northern Territory | Yes | [1992] 8 ACSR 255 | Australia | Cited regarding directors acting in abuse of their powers by knowingly or recklessly acting contrary to the general law. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Employment of Foreign Manpower Act (Cap 91A, 2007 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Derivative action
- Fiduciary duty
- Minority shareholders
- Foreign worker levy
- Recruitment fees
15.2 Keywords
- derivative action
- fiduciary duty
- companies act
- minority shareholders
- director duties
16. Subjects
- Company Law
- Corporate Governance
17. Areas of Law
- Company Law
- Breach of Fiduciary Duty
- Civil Procedure