Scotts Investments (Singapore) Pte Ltd (in compulsory liquidation) v Jumabhoy Ameerali R and Others

[2] Rafiq Jumabhoy’s claim was based solely on the ground that the board of directors of SIS had passed resolutions and issued letters of indemnities to that effect. The facts were not complicated but some necessary references had to be made to the history of the Jumabhoy family dispute that began publicly in 1995 in Suit No 1801 of 1995. In that action, Rajabali Jumabhoy together with two of his sons, Yusuf and Mustafa, sued his other son, Ameerali (the father of Rafiq Jumabhoy), Iqbal Jumabhoy (Rafiq’s brother) and Rafiq Jumabhoy himself. A side issue concerning an alleged share option in favour of Rafiq Jumabhoy turned him against his brother, Iqbal. Rafiq Jumabhoy subsequently switched allegiance in the family dispute to the Rajabali-Mustafa-Yusuf camp and, Ameerali and Iqbal brought an application to put SIS under receivership. That application was filed on 12 April 1996. That might have consequently worsened the financial problems of SIS, when its creditor-banks became, understandably, even more nervous. SIS was only a holding company which held shares in Scotts Holdings Ltd and various subsidiary companies such as Lion City Holdings Pte Ltd. Thus, with no trading or any substantial or active business, it had long not required a manager or managing director. However, because of the family dispute in court and with creditors making demands, action was needed.

[3] Yusuf Jumabhoy and Rafiq Jumabhoy were authorised by board resolutions of 27 July 1996 and 6 August 1996 to take appropriate action to preserve the company. The two resolutions were identical in wording except that they concerned two different companies. One referred to Lion City Holdings Pte Ltd (“LCH”) and the other to Scotts Holdings Ltd. The relevant portions of the wording of the resolution is important and I set it out in full:

[9] The third defendant’s counterclaim was therefore dismissed save for the inquiry as to out-of-pocket expenses paid on behalf of SIS.