New UK case involving partnership with assets in the UK and India and judgments in both jurisdictions

Tarloch Singh Badyal v Malkat Singh Badyal and Santokh Singh Badyal [2019] EWHC 467 (Ch)

This judgment was given in the course of ongoing proceedings between three brothers who were partners.  In earlier proceedings, the English court had ordered the partnership to be wound up, and accounts and inquiries to be conducted, and declared two UK properties, four Indian companies and an Indian property development to be either partnership assets or held by the claimant on trust for all three partners in equal shares, and that the claimant must account to the defendants for his dealings with these assets as a fiduciary. The court had also declared that a further property was a partnership asset or held by the second defendant on trust for all of them. Subsequently, an Indian court ruled that the three partners should not seek enforcement of the English judgment, insofar as it related to Indian assets, without leave of the Indian court.

In this judgment, the English High Court ruled that although it should avoid making an order requiring any of the defendants to act in breach of the Indian Order, that Order did not prohibit the enforcement of orders for disclosure or the taking of accounts and inquiries, or of in personam orders against the claimant so long as those orders did not require him to dispose of, or alter rights in, Indian property or company shares. However, the Indian Order did not relate to one of the two companies in respect of which the defendants sought an order for the transfer of shares and, in the absence of anything in that company’s articles permitting it to refuse to register the share transfer already ordered by the English court, this transfer should be made. In relation to the other company, the court gave the defendants liberty to apply for a further order if the Indian court, before which proceedings were still ongoing, revoked or varied the Indian Order.

The court noted that since sales were taking place of the Indian property development, there was a clear risk of dissipation of assets in which the defendants owned equal shares with the claimant. The claimant had failed to give prior notification of sales to the defendants, as previously ordered by the English court, and therefore the court ordered the scheme which the claimant himself had previously proposed, whereby a court order would be required to authorise a sale if the partners could not agree on a valuation. Although this might result in delays in the sales, it was required in order to reasonably protect the defendants, and as it only operated as an order in personam against the claimant, it did not breach the Indian Order.

Since the claimant had failed to provide adequate information and disclosure, the court made the more specific and targeted order sought by the defendants as to what information and disclosure was required.

The court declined to order the sale of the property registered in the name of the second defendant, pending further information about the values of all the UK and Indian assets, and decisions as to which properties should be sold and which distributed in specie, and how the proceeds of sale were to be distributed.

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