Bhavin Rashmi Mehta v Chetan Mehta: Director Resignation & Company Law
In Bhavin Rashmi Mehta v Chetan Mehta, the High Court of Singapore dismissed an originating summons filed by Mr. Bhavin Rashmi Mehta against Mr. Chetan Mehta and others, concerning the validity of a director's resignation and alleged contraventions of the Companies Act. The court found that Mr. Mehta failed to demonstrate a contravention of the Companies Act and that the requested remedies were not appropriate in the context of a shareholder dispute. The court dismissed the originating summons.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Originating Summons dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Shareholder dispute over director's resignation. Court dismissed the originating summons, finding no contravention of Companies Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Bhavin Rashmi Mehta | Plaintiff | Individual | Claim Dismissed | Lost | Clement Julien Tan Tze Ming, Luis Inaki Duhart Gonzalez |
| Chetan Mehta | Defendant | Individual | Judgment for Defendant | Won | Ashok Kumar, Lim Khai Chong, Berwin Chua, Rajan Menon, Harjeet Kaur Dhaliwal |
| Sanjiwan Sahni | Defendant | Individual | Judgment for Defendant | Won | Ashok Kumar, Lim Khai Chong, Berwin Chua, Rajan Menon, Harjeet Kaur Dhaliwal |
| Quek Hung Guan | Defendant | Individual | Judgment for Defendant | Won | Ashok Kumar, Lim Khai Chong, Berwin Chua, Rajan Menon, Harjeet Kaur Dhaliwal |
| Arpee Gem Pte Ltd | Defendant | Corporation | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Valerie Thean | Judge of the High Court | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Clement Julien Tan Tze Ming | Selvam LLC |
| Luis Inaki Duhart Gonzalez | Selvam LLC |
| Ashok Kumar | BlackOak LLC |
| Lim Khai Chong | BlackOak LLC |
| Berwin Chua | BlackOak LLC |
| Rajan Menon | RHTLaw Asia LLP |
| Harjeet Kaur Dhaliwal | RHTLaw Asia LLP |
4. Facts
- Mr. Bhavin Mehta and Mr. Chetan Mehta each held one share in Arpee Gem.
- Burma Ruby Inc and BC Manufacturing Inc held 18,000 shares each in Arpee Gem.
- Mr. Sanjiwan Sahni purportedly resigned as director in 2015 and 2018.
- Mr. Sahni continued to act as a director after the purported resignations.
- Mr. Sahni signed off on financial statements after the purported resignations.
- Mr. Sahni received director's fees after the purported resignations.
- Mr. Chetan Mehta sought to be appointed as Arpee Gem’s proxy for the Kay Diamonds AGM.
5. Formal Citations
- Bhavin Rashmi Mehta v Chetan Mehta and others, Originating Summons No 1267 of 2021, [2022] SGHC 173
6. Timeline
| Date | Event |
|---|---|
| Arpee Gem Pte Ltd incorporated | |
| Mr. Sanjiwan Sahni appointed as a director of Arpee Gem | |
| Mr. Prabodh Mehta resigned as a director of Kay Diamonds NV, GES and MIC | |
| Mr. Sanjiwan Sahni sent email indicating his resignation | |
| Mr. Sanjiwan Sahni sent email with letter indicating his resignation with immediate effect | |
| Mr. Prabodh Mehta passed away | |
| Mr. Chetan Mehta issued notice calling for board meetings of Kay Diamonds and MIC | |
| Convocations for the Kay Diamonds and MIC AGMs were signed, fixing both AGMs on 6 October 2021 | |
| Purported Resolutions signed | |
| Mr. Bhavin Mehta received an email from Fiona Lim, giving notice of the October 2021 AGMs | |
| Mr. Chetan Mehta sent a letter informing that he would be present as proxy for Arpee Gem in the October 2021 AGMs | |
| Mr. Bhavin Mehta received signed copies of the Draft Resolutions dated 21 September 2021 | |
| Mr. Bhavin Mehta emailed Mr. Chew, raising various objections to the validity of the Purported Resolutions | |
| Kay Diamonds and MIC AGMs | |
| Mr. Bhavin Mehta filed this OS | |
| Mr. Bhavin Mehta filed Summons No 433 of 2022 | |
| Parties heard | |
| OS dismissed | |
| Parties heard | |
| Court dealt with costs | |
| Judgment Date |
7. Legal Issues
- Validity of Director Resignation
- Outcome: The court found that the plaintiff did not sufficiently prove that the director's resignation was valid and effective, considering the director's continued actions and the company's conduct.
- Category: Substantive
- Related Cases:
- [1907] 2 Ch 370
- [2021] 3 LRC 434
- Contravention of Companies Act
- Outcome: The court found that the plaintiff failed to demonstrate a contravention of the Companies Act, except for a potential contravention of s 173A, which was insufficient to grant the requested relief.
- Category: Substantive
- Estoppel by Convention
- Outcome: The court determined that the defendant's argument on estoppel by convention was a viable one, depending on the factual content.
- Category: Substantive
- Related Cases:
- [2008] 2 SLR(R) 474
8. Remedies Sought
- Declaration that the 2015 Resignation was valid and effective
- Declaration that the 2018 Resignation was valid and effective
- Declaration that Mr. Sahni ceased to be a director of Arpee Gem
- Declaration that the Purported Resolutions of Arpee Gem are invalid
- Declaration that the appointment of the 1st Defendant as a proxy of Arpee Gem for AGMs of KD and MIC are invalid
- Order that Arpee Gem take necessary steps to remove Mr. Sahni as director of Arpee Gem on ACRA records
- Injunction to restrain Mr. Sahni from acting as a director of Arpee Gem
- Injunction to restrain the defendants from taking any steps in furtherance of the Purported Resolutions
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Corporate Litigation
- Shareholder Disputes
11. Industries
- Gems and Jewelry
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ng Kek Wee v Sim City Technology Ltd | High Court | Yes | [2014] 4 SLR 723 | Singapore | Cited for the principle that s 216A of the Companies Act 1967 acts as a safeguard to ensure actions are in the legitimate interests of the company. |
| Foss v Harbottle | Court of Chancery | Yes | (1843) 2 Hare 461 | England and Wales | Cited for the proper plaintiff rule, stating that in an action for a wrong done against a company, the proper plaintiff is the company itself. |
| Mukherjee Amitava v DyStar Global Holdings (Singapore) Pte Ltd and others | High Court | Yes | [2018] 5 SLR 256 | Singapore | Cited to recognize that the refusal or failure to do an act required by the CA is essentially a contravention of the CA. |
| Karaha Bodas Co LLC v Pertamina Energy Trading Ltd and another appeal | Court of Appeal | Yes | [2006] 1 SLR(R) 112 | Singapore | Cited for the principle that declaratory relief would generally be superfluous for a plaintiff who had a subsisting cause of action. |
| Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and others | High Court | Yes | [2004] 3 SLR(R) 12 | Singapore | Cited regarding the discretion to grant an injunction pursuant to s 409A of the Companies Act. |
| Viknesh Dairy Farm Pte Ltd v Balakrishnan s/o P S Maniam and others | High Court | Yes | [2015] SGHC 27 | Singapore | Cited for the principle that a mandatory injunction imposes an onerous burden on the person against whom the injunction is issued. |
| Tay Tuan Kiat v Pritnam Singh Brar | High Court | Yes | [1985–1986] SLR(R) 763 | Singapore | Cited regarding the balance of benefits between the plaintiff and the defendant when a mandatory order is sought. |
| Charrington v Simons & Co Ltd | Court of Appeal | Yes | [1970] 1 WLR 725 | England and Wales | Cited regarding the considerations for a mandatory order, including the benefit to the plaintiff and detriment to the defendant. |
| Vastint Leeds BV v Persons unknown | High Court | Yes | [2019] 4 WLR 2 | England and Wales | Cited for the two-stage test for prohibitory injunctions and relevant considerations. |
| Islington London Borough Council v Elliot | Court of Appeal | Yes | [2012] Civ 56 | England and Wales | Cited as a basis for the two-stage test for prohibitory injunctions. |
| Hooper v Rogers | Court of Appeal | Yes | [1975] Ch 43 | England and Wales | Cited regarding the imminence of threatened infringement for prohibitory injunctions. |
| Travista Development Pte Ltd v Tan Kim Swee Augustine and others | Court of Appeal | Yes | [2008] 2 SLR(R) 474 | Singapore | Cited for the elements of estoppel by convention. |
| Day, Ashley Francis v Yeo Chin Huat Anthony | High Court | Yes | [2020] 5 SLR 514 | Singapore | Cited regarding the application of estoppel by convention. |
| Tinkler v Revenue and Customs Commissioners | Court of Appeal | Yes | [2021] 3 WLR 697 | England and Wales | Cited regarding the application of estoppel by convention in non-contractual dealings. |
| Glossop v Glossop | High Court | Yes | [1907] 2 Ch 370 | England and Wales | Cited for the principle that the resignation of a director could be withdrawn by either the company or the party who gave the resignation, as long as both parties consented to the withdrawal. |
| Byers and others v Ningning | Judicial Committee of the Privy Council | Yes | [2021] 3 LRC 434 | Belize | Cited for the principle that the withdrawal of a director’s resignation could also be implied by conduct. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act 1967 | Singapore |
| Companies Act 1967, s 216A | Singapore |
| Companies Act 1967, s 216 | Singapore |
| Companies Act 1967, s 399 | Singapore |
| Companies Act 1967, s 399(2) | Singapore |
| Companies Act 1967, s 409A | Singapore |
| Companies Act 1967, s 409A(1) | Singapore |
| Companies Act 1967, s 409A(2) | Singapore |
| Companies Act 1967, s 39 | Singapore |
| Supreme Court of Judicature Act 1969 | Singapore |
| Companies Act 1967, s 145(4A) | Singapore |
| Companies Act 1967, s 145(4B) | Singapore |
| Companies Act 1967, s 173A | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Resignation
- Director
- Companies Act
- Shareholder Dispute
- Estoppel by Convention
- Originating Summons
- ACRA
- Proxy
- Resolutions
- Corporate Governance
15.2 Keywords
- Director Resignation
- Companies Act
- Shareholder Dispute
- Injunction
- Corporate Governance
- Singapore
- ACRA
16. Subjects
- Company Law
- Directors
- Resignation
- Injunctions
- Civil Procedure
17. Areas of Law
- Company Law
- Civil Procedure
- Injunctions