Chainani v Singh: Shareholder Oppression & Director's Duties in Dormant Companies
In Chainani v Singh, the High Court of Singapore addressed a shareholder oppression action brought by Tarun Hotchand Chainani against Avinderpal Singh concerning the management of Avitar Enterprises Pte Ltd and Avitar Holdings Pte Ltd. Chainani claimed Singh breached his duties by failing to account for company funds used for investments in properties and other unauthorized transactions. The court found Singh's breaches of an understanding to invest company funds unfairly prejudiced Chainani. The court ordered the winding up of both companies and directed Singh to provide a detailed account of the investments made with company funds.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Shareholder oppression action concerning breach of director's duties and accounting for company funds used for investments. Court orders winding up of companies.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tarun Hotchand Chainani | Plaintiff | Individual | Judgment for Plaintiff | Won | |
| Avinderpal Singh s/o Ranjit Singh | Defendant | Individual | Account to be rendered | Lost | |
| Avitar Enterprises Pte Ltd | Defendant | Corporation | Winding up ordered | Lost | |
| Avitar Holdings Pte Ltd | Defendant | Corporation | Winding up ordered | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kristy Tan | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- Mr. Chainani and Mr. Singh were equal shareholders and directors of Avitar Enterprises and Avitar Holdings.
- The companies were run as a quasi-partnership based on mutual trust and confidence.
- An understanding was reached in 2005 to use company funds to invest in stocks and real estate.
- Mr. Singh acquired properties using company funds but failed to account for them.
- Mr. Singh took unauthorized loans and payments from the company.
- Mr. Chainani did not have the requisite shareholder power to stop the commercially unfair conduct by Mr Singh.
- Mr. Singh persistently breached his obligation to account under the Understanding, from 2013 and until the commencement of this action.
5. Formal Citations
- Tarun Hotchand Chainani v Avinderpal Singh s/o Ranjit Singh and others, Suit No 703 of 2020, [2024] SGHC 117
6. Timeline
| Date | Event |
|---|---|
| Avitar Enterprises Pte Ltd incorporated | |
| Avitar Holdings Pte Ltd incorporated | |
| Understanding reached to use company funds for investments | |
| Interim dividend of S$1.5m declared | |
| Credit entry of US$1,634,217.17 inserted in Mr Singh’s ledger | |
| Mandarin Gardens sold | |
| Burj Vista sold | |
| FV-21-2105, The Hills 1401, The Hills 505 and Mira sold | |
| Evelyn Road sold | |
| Meadows sold | |
| Spring Grove sold | |
| Parc Olympia sold | |
| Archipelago sold | |
| Spottiswoode sold | |
| Lawsuit filed | |
| Settlement Agreement entered | |
| Trial began | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Shareholder Oppression
- Outcome: The court found that Mr. Singh's breaches of the Understanding constituted commercial unfairness within the meaning of s 216.
- Category: Substantive
- Sub-Issues:
- Breach of director's duties
- Failure to account for company funds
- Breach of Director's Duties
- Outcome: The court found that Mr. Singh breached his duties as a director by failing to account for company funds used for investments.
- Category: Substantive
- Sub-Issues:
- Failure to act in the best interest of the company
- Misuse of company funds
- Duty to Account
- Outcome: The court ordered Mr. Singh to render an account of the principal sums from the Company used to acquire stocks and/or real estate pursuant to the Understanding and the profits made from these investments of the Company.
- Category: Substantive
- Sub-Issues:
- Failure to provide accurate accounts
- Concealment of financial information
8. Remedies Sought
- Winding up of the companies
- Taking of accounts
- Payment of sums found due
- Damages
9. Cause of Actions
- Shareholder Oppression
- Breach of Fiduciary Duty
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Wholesale Trade
- Electronics
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Court of Appeal | Yes | [2018] 2 SLR 333 | Singapore | Cited for the principle that commercial unfairness involves a visible departure from fair dealing and a violation of fair play, and that the court considers legitimate expectations in granting relief under s 216. |
| Oon Swee Gek and others v Violet Oon Inc Pte Ltd and others and other matter | High Court | Yes | [2024] SGHC 13 | Singapore | Cited for the principle that the commercial agreement between parties sets the frame against which commercial unfairness is judged. |
| Anita Hatta v Lee Siow Kiang Georgia and others | High Court | Yes | [2020] 5 SLR 304 | Singapore | Cited for the principle that the breach of an informal understanding may amount to commercial unfairness under s 216 and that the 'quasi-partnership' label is not determinative of whether there may be informal understandings giving rise to legitimate expectations. |
| The Wellness Group Pte Ltd and another v OSIM International Ltd and others and another suit | High Court | Yes | [2016] 3 SLR 729 | Singapore | Cited for the principle that it is more pertinent to focus on determining the substance of the commercial agreement between the shareholders as demonstrated by the evidence. |
| Deniyal bin Kamis v Mapo Engineering Pte Ltd and others | High Court | Yes | [2023] SGHC 183 | Singapore | Cited for the principle that it is more pertinent to focus on determining the substance of the commercial agreement between the shareholders as demonstrated by the evidence, keeping in mind the essential context of their personal relationship. |
| Thio Syn Kym Wendy and others v Thio Syn Pyn and others | High Court | Yes | [2017] SGHC 169 | Singapore | Cited for the principle that the key characteristic of a quasi-partnership is that the shareholders agree to associate on the basis of a personal relationship involving mutual trust and confidence. |
| Lim Kok Wah and others v Lim Boh Yong and others and other matters | High Court | Yes | [2015] 5 SLR 307 | Singapore | Cited for the principle that the key characteristic of a quasi-partnership is that the shareholders agree to associate on the basis of a personal relationship involving mutual trust and confidence. |
| Tan Teck Kee v Ratan Kumar Rai | Court of Appeal | Yes | [2022] 2 SLR 1250 | Singapore | Cited for the principle that a fiduciary obligation to account arises when a party voluntarily places himself in a position where the law can objectively impute an intention on his part to undertake such an obligation. |
| Tan Yok Koon v Tan Choo Suan and another and other appeals | Court of Appeal | Yes | [2017] 1 SLR 654 | Singapore | Cited for the principle that a fiduciary obligation to account arises when a party voluntarily places himself in a position where the law can objectively impute an intention on his part to undertake such an obligation. |
| V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and another | Court of Appeal | Yes | [2015] 5 SLR 1422 | Singapore | Cited for the principle that proprietary estoppel must be pleaded. |
| Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd | High Court | Yes | [2007] 1 SLR(R) 292 | Singapore | Cited for the principle that the representation required to found a proprietary estoppel must be made by the landowner. |
| In re Basham, decd | Court of Appeal | Yes | [1986] 1 WLR 1498 | England and Wales | Cited for the principle that the representation required to found a proprietary estoppel must be made by the landowner. |
| UJT v UJR and another matter | Court of Appeal | Yes | [2018] 4 SLR 931 | Singapore | Cited for the principle that a common intention constructive trust must be pleaded. |
| Er Kok Yong v Tan Cheng Cheng (as co-administratrix of the estate of Spencer Tuppani, deceased) and others | High Court | Yes | [2023] SGHC 58 | Singapore | Cited for the principle that the Understanding was not about how Mr Chainani and Mr Singh’s beneficial interests in any property or moneys was to be held and it is not Mr Chainani’s pleaded case that he had, under the Understanding, any proprietary interest or beneficial ownership in any properties acquired or profits made from the property transactions conducted pursuant to the Understanding. |
| Chan Yuen Lan v See Fong Mun | Court of Appeal | Yes | [2014] 3 SLR 1048 | Singapore | Cited for the principle that the Understanding was not about how Mr Chainani and Mr Singh’s beneficial interests in any property or moneys was to be held and it is not Mr Chainani’s pleaded case that he had, under the Understanding, any proprietary interest or beneficial ownership in any properties acquired or profits made from the property transactions conducted pursuant to the Understanding. |
| Ong Chai Soon v Ong Chai Koon and others | Court of Appeal | Yes | [2022] 2 SLR 457 | Singapore | Cited for the principle that the Understanding was not about how Mr Chainani and Mr Singh’s beneficial interests in any property or moneys was to be held and it is not Mr Chainani’s pleaded case that he had, under the Understanding, any proprietary interest or beneficial ownership in any properties acquired or profits made from the property transactions conducted pursuant to the Understanding. |
| Wong Shu Kiat and another v Chen Jinping Michelle (personal representative of the estate of Tin Koon Ming, deceased) and another | High Court | Yes | [2023] SGHC 105 | Singapore | Cited for the principle that the Understanding was not about how Mr Chainani and Mr Singh’s beneficial interests in any property or moneys was to be held and it is not Mr Chainani’s pleaded case that he had, under the Understanding, any proprietary interest or beneficial ownership in any properties acquired or profits made from the property transactions conducted pursuant to the Understanding. |
| Ng Kek Wee v Sim City Technology Ltd | Court of Appeal | Yes | [2014] 4 SLR 723 | Singapore | Cited for the principle that commercially unfair conduct in the management of a subsidiary is relevant where such conduct affected or impacted the holding company whose shareholder is the party claiming relief from oppression and that there is no requirement under s 216 that only minority shareholders are entitled to bring an action for relief. |
| Ascend Field Pte Ltd and others v Tee Wee Sien and another appeal | Court of Appeal | Yes | [2020] 1 SLR 771 | Singapore | Cited for the principle that the touchstone is whether the shareholder bringing the action is unable to stop the allegedly oppressive acts through the ordinary powers he possesses by virtue of his position. |
| Suying Design Pte Ltd v Ng Kian Huan Edmund and other appeals | Court of Appeal | Yes | [2020] 2 SLR 221 | Singapore | Cited for the principle that misappropriation of a company’s assets would by nature reduce the assets of the company, but, in the absence of evidence to the contrary, the “injury” to the minority shareholder in that situation is merely a reflection of the loss to the company and s 216 should not be used to vindicate such a corporate wrong. |
| Kumagai Gumi Co Ltd v Zenecon Pte Ltd and others and other appeals | Court of Appeal | Yes | [1995] 2 SLR(R) 304 | Singapore | Cited for the principle that the court’s power to make an order under s 216 is very wide and much depends on the matters complained of and the circumstances prevailing at the time of hearing and that the court’s power also extends to making an order that the company’s subsidiary company be wound up. |
| Snell v Glatis (No 2) | New South Wales Court of Appeal | Yes | [2020] NSWCA 166 | Australia | Cited for the principle that an order for winding up would be an appropriate remedy when winding up is a realistic means of securing to a plaintiff in a s 216 action his share of the value of the company. |
| UVJ and others v UVH and others and another appeal | Court of Appeal | Yes | [2020] 2 SLR 336 | Singapore | Cited for the principle that the taking of accounts is a procedure for the accounting of funds and is not in itself a remedy for wrongdoing. |
| Innovative Corp Pte Ltd v Ow Chun Ming and another | Court of Appeal | Yes | [2023] 3 SLR 1488 | Singapore | Cited for the principle that whether an account is to be provided on a common or wilful default basis has to be decided by the court before the account is ordered to be given. |
| Cheong Soh Chin and others v Eng Chiet Shoong and others | High Court | Yes | [2015] SGHC 173 | Singapore | Cited for the principle that an account may be ordered on a wilful default basis where the past misconduct of the fiduciary is such as to give rise to a reasonable prima facie inference that there may be other instances of wilful default which have yet to be uncovered. |
| Cheong Soh Chin and others v Eng Chiet Shoong and others | Court of Appeal | Yes | [2019] 4 SLR 714 | Singapore | Cited for the principle that examples of misconduct which have been found to warrant the taking of accounts on a wilful default basis include concealing or misrepresenting information in breach of the duty to account. |
| Ratan Kumar Rai v Seah Hock Thiam and others | High Court | Yes | [2021] SGHC 276 | Singapore | Cited for the principle that examples of misconduct which have been found to warrant the taking of accounts on a wilful default basis include making improper deductions from payouts due to an investor. |
| Chng Weng Wah v Goh Bak Heng | Court of Appeal | Yes | [2016] 2 SLR 464 | Singapore | Cited for the principle that a defendant who contends that he has been released from his duty to account by a settlement bears the burden of establishing that the accounts have been settled. |
| Jhaveri Darsan Jitendra and others v Salgaocar Anil Vassudeva and others | Court of Appeal | Yes | [2018] 5 SLR 689 | Singapore | Cited for the principle that a company has a separate legal personality from its shareholders means that, even if one owns all of the shares in a company, one does not own the company’s assets; instead, those assets belong to the company alone. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act | Singapore |
| s 216 of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Shareholder oppression
- Director's duties
- Quasi-partnership
- Understanding
- Accounting
- Winding up
- Commercial unfairness
- Breach of trust
- Dormant company
15.2 Keywords
- shareholder oppression
- directors duties
- company law
- winding up
- accounting
- Singapore
- Avitar Enterprises
- Avitar Holdings
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Minority Oppression | 90 |
| Winding Up | 80 |
| Corporate Law | 70 |
| Fiduciary Duties | 60 |
| Breach of Contract | 30 |
| Civil Procedure | 20 |
16. Subjects
- Company Law
- Corporate Governance
- Shareholder Rights