Touton Far East PTE Ltd v Shri Lal Mahal Ltd & Ors

Contempt of court for breach of a worldwide freezing injunction requires proof of breach, knowledge of the order, responsibility for the breach and proper notice of the committal proceedings. A person who has assumed the status and function of a director may be treated as a de facto director. Deliberate and continuing non-compliance with asset-disclosure obligations may justify imprisonment, assessed by reference to culpability, responsibility, prejudice, cooperation and mitigation. A writ of sequestration may remain appropriate even where the contemnor has no known assets within the jurisdiction, because the order may have coercive and reputational consequences.

The claimant sought permission to issue writs of sequestration and orders committing the defendants for contempt arising from breaches of a worldwide freezing injunction. The first defendant company had failed to provide ordered information about its assets and had failed to disclose shipments exceeding the value threshold specified in the order.

The court considered the responsibility of the individual defendants, including whether one former director remained a de facto director, whether each defendant knew of the order and committal proceedings, and the appropriate sanctions. The central issues were whether contempt had been proved to the criminal standard and whether sequestration or imprisonment was justified.

1. Contempt established. The claimant had to prove a breach of the order, the defendant’s awareness of it, responsibility for the breach and due notice of the committal proceedings. The breaches included failure to file an affidavit, deliberate withholding of asset information and failure to disclose three shipments exceeding $20,000. These matters were proved to the criminal standard against the company and all individual defendants except Mr Devasish Garg.
2. A former director may be a de facto director where he has assumed the status and function of a director and made himself responsible as if he were one. Relevant evidence may include the company holding the person out as a director. The evidence concerning Mr Devasish Garg did not satisfy that test.
3. Personal service of the committal application on Mr Prem Garg was dispensed with because he had deliberately refused service while being plainly aware of the application and its supporting documents.
4. Following the considerations identified in Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd & Ors [2015] EWHC 3748 (Comm), the court treated the breaches as deliberate, persistent and serious. The defendants’ roles and degrees of responsibility were material. Imprisonment was therefore necessary: 18 months for Mr Prem Garg, nine months each for Mrs Anita Garg, Mr Aggarwal and Mr Gulati, and six months for Mr Nair.
5. A writ of sequestration was appropriate against the company even though no assets were shown to be within the jurisdiction. The reasoning in Vis Trading Co Ltd v Nazarov [2015] EWHC 3327 (QB) applied: a contempt order is not futile merely because the contemnor or assets are outside the jurisdiction. Sequestration against the individual defendants was refused because imprisonment had been ordered and sequestration would serve no additional purpose.

First-instance decision. No appellate history is stated in the judgment.