Sandhu & Anor v Nagra & Ors

Sandhu & Anor v Nagra & Ors

Rostum Nagra acted in wholesale breach of duty to Fashionup Ltd by operating a fraudulent cash laundering scheme and transferring all value to Rocco Fashion Ltd for his own benefit. The purported shareholder consent to closure and transfer was obtained by deception and without disclosure of material facts, rendering it invalid. The affairs of Fashionup Ltd were conducted in a manner unfairly prejudicial to the petitioners’ interests as members, entitling them to a buyout order at a value reflecting the company’s worth before the prejudicial conduct.

Parties
Petitioner: Jatinder Singh Sandhu; Petitioner: JRG (Leicester) Ltd; Respondent: Rostum Nagra; Respondent: Rocco Fashion Ltd; Respondent: Fashionup Ltd; Respondent: Poppy Red (Leicester) Ltd
Jurisdiction
England and Wales
Judgment Date
13 April 2018
Procedural Posture
Petition Under S 994 Companies Act 2006 / Judgment After Trial on Liability and Entitlement to Buyout Order
Outcome
Petition allowed; finding of unfair prejudice.
Legal Topics
Unfair Prejudice, Director's Duties, Shareholder Remedies, Fraud, Derivative Claims, Valuation of Shares
Company Law Equity Unfair Prejudice Director's Duties Shareholder Remedies Fraud Derivative Claims Valuation of Shares

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 2 Authorities cited 3 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

Jatinder Singh Sandhu

Petitioner

JRG (Leicester) Ltd

Petitioner

Rostum Nagra

Respondent

Rocco Fashion Ltd

Respondent

Fashionup Ltd

Respondent

Poppy Red (Leicester) Ltd

Respondent

Procedural Posture

Petition Under S 994 Companies Act 2006 / Judgment After Trial on Liability and Entitlement to Buyout Order

Legal Issues

  1. 1 Whether the affairs of Fashionup Ltd were conducted in a manner unfairly prejudicial to the petitioners' interests as members
  2. 2 Whether the transfer of business and assets to Rocco Fashion Ltd and Rostum Nagra was authorised or ratified by the petitioners
  3. 3 Whether the Duomatic principle applies to the facts

Ratio Decidendi

Rostum Nagra acted in wholesale breach of duty to Fashionup Ltd by operating a fraudulent cash laundering scheme and transferring all value to Rocco Fashion Ltd for his own benefit. The purported shareholder consent to closure and transfer was obtained by deception and without disclosure of material facts, rendering it invalid. The affairs of Fashionup Ltd were conducted in a manner unfairly prejudicial to the petitioners’ interests as members, entitling them to a buyout order at a value reflecting the company’s worth before the prejudicial conduct.

Court Disposition

Petition allowed; finding of unfair prejudice.

Orders

  • Petitioners to be bought out of their shares in Fashionup Ltd by Rostum Nagra and Rocco Fashion Ltd jointly, at a value as at 20 May 2015, adjusted to exclude false supplier invoices and substitute genuine costs; valuation to be determined by agreement or further hearing.
  • Further hearing to be listed to finalise the order and address the impact of Select’s proposed CVA if relevant.