Atkinson & Anor v Varma (aka Sanjeev Varma & Ors

Atkinson & Anor v Varma (aka Sanjeev Varma & Ors

Mr Varma acted as a de facto director and breached fiduciary duties by misappropriating company funds for personal use and transferring £3,122,841.75 to GCFZE, a company he owned and controlled, for no consideration. GCFZE is jointly and severally liable with Mr Varma for knowing receipt of those sums. The explanations and documents provided by Mr Varma regarding the existence of diamonds and jewellery and the role of Mr Singh were not credible. The sums are recoverable as equitable compensation with compound interest. The claim against Mr Khadka is adjourned to trial.

Parties
Applicant/joint Liquidator: Paul Atkinson; Applicant/joint Liquidator: Glyn Mummery; First Respondent: Sanjiv Varma (aka Sanjeev Varma); Second Respondent: Arjun Khadka; Third Respondent: Grosvenor Consultants FZE; Fourth Respondent: Siddhant Varma (aka Sid Varma); Fifth Respondent: Jonathan England
Jurisdiction
England and Wales
Judgment Date
13 May 2020
Procedural Posture
Insolvency/companies / Judgment After Trial of Applications for Judgment and Delivery Up
Outcome
Judgment for the Joint Liquidators against Mr Varma and GCFZE; application against Mr Khadka adjourned to trial; costs and quantum of costs reserved.
Legal Topics
Breach of Fiduciary Duty, Knowing Receipt, Equitable Compensation, Director Duties, Transaction at Undervalue, Debarring Orders, Liquidation
Insolvency Law Company Law Equity and Trusts Breach of Fiduciary Duty Knowing Receipt Equitable Compensation Director Duties Transaction at Undervalue +2 more

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Parties

Paul Atkinson

Applicant/joint Liquidator

Glyn Mummery

Applicant/joint Liquidator

Sanjiv Varma (aka Sanjeev Varma)

First Respondent

Arjun Khadka

Second Respondent

Grosvenor Consultants FZE

Third Respondent

Siddhant Varma (aka Sid Varma)

Fourth Respondent

Jonathan England

Fifth Respondent

Procedural Posture

Insolvency/companies / Judgment After Trial of Applications for Judgment and Delivery Up

Legal Issues

  1. 1 Whether Mr Varma acted as a de facto or shadow director and breached fiduciary duties
  2. 2 Whether GCFZE is liable for knowing receipt and/or transaction at undervalue
  3. 3 Whether sums were misappropriated from the Company and are recoverable as equitable compensation

Ratio Decidendi

Mr Varma acted as a de facto director and breached fiduciary duties by misappropriating company funds for personal use and transferring £3,122,841.75 to GCFZE, a company he owned and controlled, for no consideration. GCFZE is jointly and severally liable with Mr Varma for knowing receipt of those sums. The explanations and documents provided by Mr Varma regarding the existence of diamonds and jewellery and the role of Mr Singh were not credible. The sums are recoverable as equitable compensation with compound interest. The claim against Mr Khadka is adjourned to trial.

Court Disposition

Judgment for the Joint Liquidators against Mr Varma and GCFZE; application against Mr Khadka adjourned to trial; costs and quantum of costs reserved.

Orders

  • Mr Varma and GCFZE to pay £3,122,841.75 jointly and severally to the Joint Liquidators as equitable compensation, with compound interest at 8% per annum.
  • Mr Varma to pay £140,000 for misappropriated company funds from the Casa Account, with compound interest at 8% per annum.