Sharma & Anor v Farlam Ltd & Ors

Sharma & Anor v Farlam Ltd & Ors

Mrs Bhalla held 20 Farlam shares as nominee/trustee for Dr Sharma from inception. Mrs Sharma was a nominee for Dr Sharma. No binding agreement allowed Mrs Bhalla to retain the first dividend. Pre-emption rights under the Shareholders’ Agreement were not triggered by the trust declaration or proposed transfer, or were waived/abandoned by Mr Uppal. Mrs Bhalla breached trust by withholding dividends and obstructing transfer. Dr Sharma is entitled to be registered as shareholder and to an account of dividends. The arbitration award for sale of Trafalgar Road premises is enforceable as the sale will be conditional on compliance with the law.

Parties
Claimant (6 Bm30117) / Defendant (8 Bm30085): Dr Anil Sharma; Claimant (6 Bm30117): Mrs Jayshree Sharma; Defendant (6 Bm30117): Farlam Limited; Defendant (6 Bm30117): Mrs Davinder Kumari Bhalla; Defendant (6 Bm30117): Mr Hardial Singh Uppal; Claimant (8 Bm30085) / Defendant (6 Bm30117): Dr Sunil Bhalla
Jurisdiction
England and Wales
Judgment Date
10 July 2009
Procedural Posture
Civil (chancery, Company/partnership/trusts) / Judgment After Trial
Outcome
Claim allowed in 6BM30117; Arbitration award enforced in 8BM30085
Legal Topics
Nominee Shareholding, Breach of Trust, Pre Emption Rights, Rectification of Register, Enforcement of Arbitration Award, Dividends, Share Transfer, Goodwill in Medical Practice
Equity and Trusts Company Law Partnership Law Arbitration Nominee Shareholding Breach of Trust Pre Emption Rights Rectification of Register +4 more

Case Brief

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Parties

Dr Anil Sharma

Claimant (6 Bm30117) / Defendant (8 Bm30085)

Mrs Jayshree Sharma

Claimant (6 Bm30117)

Farlam Limited

Defendant (6 Bm30117)

Mrs Davinder Kumari Bhalla

Defendant (6 Bm30117)

Mr Hardial Singh Uppal

Defendant (6 Bm30117)

Dr Sunil Bhalla

Claimant (8 Bm30085) / Defendant (6 Bm30117)

Procedural Posture

Civil (chancery, Company/partnership/trusts) / Judgment After Trial

Legal Issues

  1. 1 Whether Mrs Bhalla held 20 Farlam shares as nominee/trustee for Dr Sharma
  2. 2 Whether Mrs Sharma was a nominee for Dr Sharma
  3. 3 Whether pre-emption rights under the Shareholders’ Agreement were triggered and enforceable

Ratio Decidendi

Mrs Bhalla held 20 Farlam shares as nominee/trustee for Dr Sharma from inception. Mrs Sharma was a nominee for Dr Sharma. No binding agreement allowed Mrs Bhalla to retain the first dividend. Pre-emption rights under the Shareholders’ Agreement were not triggered by the trust declaration or proposed transfer, or were waived/abandoned by Mr Uppal. Mrs Bhalla breached trust by withholding dividends and obstructing transfer. Dr Sharma is entitled to be registered as shareholder and to an account of dividends. The arbitration award for sale of Trafalgar Road premises is enforceable as the sale will be conditional on compliance with the law.

Court Disposition

Claim allowed in 6BM30117; Arbitration award enforced in 8BM30085

Orders

  • Declaration that Dr Sharma is beneficial owner of 20 Farlam shares
  • Mandatory order for Mrs Bhalla to execute stock transfer to Dr Sharma for nil consideration