Adcrop Pte Ltd v Gokul Vegetarian Restaurant: Winding Up Application Dismissed

In the General Division of the High Court of Singapore, Adcrop Pte Ltd sought to wind up Gokul Vegetarian Restaurant and Cafe Pte Ltd. Mdm Rajeswary, a shareholder, opposed the application, arguing it was an abuse of process to wrest control of the business. The court, presided over by Senior Judge Andrew Ang, dismissed the winding up application, finding a scheme orchestrated by Mdm Lakshmi to take control of the business from Gokul Vegetarian and Mdm Rajeswary.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Winding up application dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Winding up application dismissed due to abuse of process. The court found a scheme to wrest control of the restaurant business.

1.7 Decision Date

22 May 2023

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Adcrop Pte Ltd	Plaintiff	Corporation	Application Dismissed	Lost	Senthil Dayalan of Sim Chong LLC
Gokul Vegetarian Restaurant and Cafe Pte Ltd	Defendant	Corporation	Winding up application dismissed	Won
Rajeswary d/o Sinan	Non-party	Individual	Opposition successful	Won	Suang Wijaya of Eugene Thuraisingam LLP Sophia Ng of Eugene Thuraisingam LLP Shirin Chew of Eugene Thuraisingam LLP
Chandra Maha Lakshmi	Non-party	Individual	Actions unsuccessful	Lost

3. Judges

Judge Name	Title	Delivered Judgment
Andrew Ang	Senior Judge	Yes

4. Counsels

Counsel Name	Organization
Senthil Dayalan	Sim Chong LLC
Suang Wijaya	Eugene Thuraisingam LLP
Sophia Ng	Eugene Thuraisingam LLP
Shirin Chew	Eugene Thuraisingam LLP

4. Facts

Adcrop Pte Ltd sought to wind up Gokul Vegetarian based on an unpaid statutory demand of $20,000.
Mdm Lakshmi and Mdm Rajeswary are equal shareholders and sisters-in-law in Gokul Vegetarian.
Mdm Rajeswary opposed the winding up, alleging it was a ploy by Mdm Lakshmi to wrest control.
The $20,000 debt arose from a failed share issuance to Adcrop, opposed by Mdm Rajeswary.
Mdm Lakshmi transferred Gokul Vegetarian's assets to Gokul-Raas, a company she controlled.
Mdm Lakshmi did not inform Mdm Rajeswary of the termination of tenancy or the winding up application.
Adcrop obtained assignments of trade debts from Gokul Vegetarian's suppliers.

5. Formal Citations

Adcrop Pte Ltd v Gokul Vegetarian Restaurant and Cafe Pte Ltd, Companies Winding up No 198 of 2021, [2023] SGHC 152

6. Timeline

Date	Event
2003-01-01	Gokul Vegetarian was incorporated.
2017-01-01	Mdm Lakshmi allegedly acquired more control over Gokul Vegetarian.
2018-01-01	Mdm Rajeswary suspected Mdm Lakshmi was channeling money to a competing business.
2021-04-21	Mdm Lakshmi and Mr Rauinderan submitted a notice of change of directors to ACRA.
2021-08-19	Mdm Rajeswary challenged her removal as director in HC/OS 842/2021.
2021-08-20	Mdm Rajeswary received a notice for an Extraordinary General Meeting.
2021-09-01	Solicitors for 78 Capital Pte Ltd served a letter of demand for payment of arrears of rental.
2021-09-04	Extraordinary General Meeting held.
2021-09-06	Mdm Lakshmi paid 78 Capital Pte Ltd $588.50 for its legal fees.
2021-09-15	78 Capital Pte Ltd issued a notice to Gokul Vegetarian to terminate the tenancy.
2021-09-17	Mdm Lakshmi executed a fresh tenancy agreement with 78 Capital Pte Ltd for Gokul-Raas.
2021-09-20	Mdm Lakshmi applied to the Singapore Food Agency to change the Business Name on Gokul Vegetarian’s SFA license to Gokul-Raas Pte Ltd.
2021-09-23	Mdm Lakshmi applied to the Ministry of Manpower to change the employer of Gokul Vegetarian’s foreign workers to Gokul-Raas.
2021-09-28	Plaintiff’s solicitors served a statutory demand on Gokul Vegetarian for repayment of $20,000.
2021-10-06	Mdm Lakshmi filed an affidavit in HC/OS 842/2021.
2021-10-27	HC/CWU 198/2021 was filed and served on Gokul Vegetarian.
2021-11-09	Mdm Rajeswary’s solicitors wrote to the plaintiff’s solicitors alleging the $20,000 was a sham loan.
2021-11-12	Plaintiff’s solicitors replied to Mdm Rajeswary’s solicitors.
2021-11-15	Mdm Lakshmi’s solicitors wrote to Mdm Rajeswary’s solicitors resisting the demand that the $20,000 be returned.
2021-11-24	Mdm Lakshmi filed a further affidavit.
2021-12-01	HC/OS 842/2021 was heard and resolved in Mdm Rajeswary’s favour.
2021-12-02	Mdm Rajeswary discovered that Gokul Vegetarian’s tenancy had been terminated.
2022-04-25	Hearing before the judge where Mr Singh discharged himself from representing Gokul Vegetarian.
2022-09-14	Hearing Transcript.
2022-09-15	Hearing Transcript.
2022-09-16	Hearing Transcript.
2022-10-21	NP1 Skeletals.
2022-11-04	Plaintiff’s Skeletals.
2023-05-23	Judgment reserved.

7. Legal Issues

Abuse of Process
- Outcome: The court found that the winding up application was an abuse of process.
- Category: Procedural
- Sub-Issues:
  - Collateral purpose
  - Improper purpose
- Related Cases:
  - [2008] 4 SLR(R) 348
Standing of Shareholder/Contributory to Oppose Winding Up Application
- Outcome: The court held that Mdm Rajeswary had standing to oppose the winding up application as a shareholder/contributory.
- Category: Procedural
- Related Cases:
  - [2016] 3 SLR 1156
  - [2020] 5 SLR 1002
  - [2022] SGHC 258
Inability to Pay Debts
- Outcome: The court acknowledged Gokul Vegetarian's insolvency but dismissed the application due to abuse of process.
- Category: Substantive
- Related Cases:
  - [1987] SLR(R) 6
  - [2021] 2 SLR 478
Disputed Debt
- Outcome: The court found that there was a substantial and bona fide dispute as to whether the debts were incurred by Gokul Vegetarian.
- Category: Substantive
- Related Cases:
  - [2008] 2 SLR(R) 491

8. Remedies Sought

Winding Up Order

9. Cause of Actions

Winding Up
Breach of Contract
Unjust Enrichment

10. Practice Areas

Winding Up
Corporate Litigation

11. Industries

Food and Beverage
Restaurant

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Phang Choo Ong v Gilcom Investment Pte Ltd	High Court	Yes	[2016] 3 SLR 1156	Singapore	Cited for the principle that a contributory has standing to oppose a winding up application.
Ang Chek Chin v ANS Import & Export Pte Ltd (formerly known as Ang Ngee Seng Import & Export Pte Ltd)	High Court	Yes	[2020] 5 SLR 1002	Singapore	Cited for the principle that a contributory has standing to oppose a winding up application.
Atlas Equifin Pte Ltd v Electronic Cash and Payment Solutions (S) Pte Ltd (Andy Lim and others, non-parties)	High Court	Yes	[2022] SGHC 258	Singapore	Cited for the test for granting leave to a shareholder/contributory to challenge a winding up, but the court disagreed with the leave requirement.
Pac-Asian Services Pte Ltd v European Asian Bank AG	Court of Appeal	Yes	[1987] SLR(R) 6	Singapore	Cited for the principle that the presumption of inability to pay debts is not rebuttable.
Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd)	Court of Appeal	Yes	[2021] 2 SLR 478	Singapore	Cited for the principle that a winding up order should be made ex debito justitiae where a company is proven or deemed unable to pay its debts, but the court retains discretion.
BNP Paribas v Jurong Shipyard Pte Ltd	Court of Appeal	Yes	[2009] 2 SLR(R) 949	Singapore	Cited for the principle that the court retains discretion to decline a winding up order even if statutory bases are made out.
Lai Shit Har and another v Lau Yu Man	Court of Appeal	Yes	[2008] 4 SLR(R) 348	Singapore	Cited for the principle that the court may disallow a winding up application which amounts to an abuse of process.
Ting Shwu Ping v Scanone Pte Ltd and another appeal	Court of Appeal	Yes	[2017] 1 SLR 95	Singapore	Cited for the principle that winding up applications can be an abuse of process if used to circumvent buyout mechanisms.
Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other matters	High Court	Yes	[2017] SGHC 84	Singapore	Cited for the principle that winding up applications can be an abuse of process if used to circumvent buyout mechanisms.
iTronic Holdings Pte Ltd v Tan Swee Leon	Court of Appeal	Yes	[2018] 4 SLR 359	Singapore	Cited for the principle that claims amounting to a collateral attack on a prior decision are an abuse of process.
Kwa Ban Cheong v Kuah Boon Sek and others	High Court	Yes	[2003] 3 SLR(R) 644	Singapore	Cited for the principle that claims amounting to a collateral attack on a prior decision are an abuse of process.
Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and others	Court of Appeal	Yes	[1997] 3 SLR(R) 649	Singapore	Cited for the principle that the categories of conduct which might render an application an abuse of process are not closed.
Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other appeals	Court of Appeal	Yes	[2018] 1 SLR 763	Singapore	Cited for the principle that the court retains a general residual discretion to consider all other relevant factors when deciding whether a company should be wound up.
In the Matter of the Companies Ordinance, Cap 32 and in the Matter of Power Point Engineering Limited	High Court	Yes	[2000] HKCFI 800	Hong Kong	Cited for the principle that the court retains a general residual discretion to consider all other relevant factors when deciding whether a company should be wound up.
Metalform Asia Pte Ltd v Holland Leedon Pte Ltd	High Court	Yes	[2007] 2 SLR(R) 268	Singapore	Cited for the principle that the court retains a general residual discretion to consider all other relevant factors when deciding whether a company should be wound up.
Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal	Court of Appeal	Yes	[2008] 2 SLR(R) 491	Singapore	Cited for the principle that a substantial and bona fide dispute as to whether debts were incurred is a basis to dismiss a winding up application.
Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and another v Sandar Aung	High Court	Yes	[2007] 1 SLR(R) 227	Singapore	Cited for the principle that in order to transfer the legal right to a debt by an assignment, an absolute assignment must be executed and notice of this assignment must be given to the debtor.
Sandar Aung v Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and another	Court of Appeal	Yes	[2007] 2 SLR(R) 891	Singapore	Cited for the principle that in order to transfer the legal right to a debt by an assignment, an absolute assignment must be executed and notice of this assignment must be given to the debtor.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act 2018	Singapore
Companies Act 1967	Singapore
Civil Law Act 1909	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Winding up application
Statutory demand
Abuse of process
Collateral purpose
Shareholder
Contributory
Extraordinary General Meeting
Trade debts
Assignment of debts
Tenancy agreement
Insolvency

15.2 Keywords

Winding up
Insolvency
Abuse of process
Restaurant
Shareholder dispute

17. Areas of Law

Area Name	Relevance Score
Winding Up	95
Insolvency Law	90
Abuse of Process	70
Company Law	60
Lifting corporate veil	30

16. Subjects

Insolvency
Company Law
Abuse of Process