Intermedia Productions Ltd & Anor v Pate & Ors

The petition under section 994 of the Companies Act 2006 alleging conduct of the company’s affairs that was unfairly prejudicial was dismissed. The court found that the central dispute concerned legal entitlement to the issued share capital and that many post-1992 entries in Companies House annual returns did not necessarily reflect valid allotments or transfers. The judge made factual findings that the 2003 allotments were authorised with the involvement of Mr Patel, but that a series of annual returns in October/November 2006 and supporting documents were forged or prepared by Mr Patel to justify purported share transfers he had himself effected.

Because interested third parties (notably Ms Shah, Nyconnit Jersey and Rajendra’s estate) were not properly before the court, and because the petitioners could, on their own pleaded alternative case, be in effective control of the company, the court refused to make a final declaration as to share ownership and refused relief under s.994. The petition was dismissed.

Background and parties:

• This is a first instance petition under section 994 of the Companies Act 2006 brought by Intermedia Productions Ltd and Sharad Chandra Patel alleging unfairly prejudicial conduct in relation to Ashia Centur Ltd.
• The dispute turned on entitlement to issued share capital, historic allotments (notably in 1998 and 2003), a sequence of annual returns filed at Companies House, alleged “2007 Understandings” between family members and the 2017 removal of Mr Patel as a director.

Nature of the claim / relief sought:

• The petitioners sought relief under s.994, and in the course of the hearing invited the court to make declarations as to share ownership (including a fallback submission that the 1992 register of members showing two issued £1 shares should be treated as determinative unless rectified).

Issues framed by the court:

• Whether historical increases in authorised capital and allotments (1998, 2003) and subsequent transfers were valid;
• Whether the 2006 annual returns and documents altering share allocations were genuine;
• Whether there were equitable constraints (“2007 Understandings” / quasi-partnership) giving rise to unfair prejudice;
• Whether declarations as to share ownership could be made given absent potentially interested parties; and locus standi issues.

Court’s reasoning and conclusions:

1. The court made detailed factual findings: it preferred the evidence of the Respondents’ witnesses (notably Vijendra and Mr Jani) and found Mr Patel to be in many respects an unreliable witness. On the balance of the contemporaneous documentation and probabilities, the 2003 allotments were made with Mr Patel’s knowledge and involvement; those annual returns stood until disturbed.
2. The entries in October/November 2006 purporting to reverse the 2003 position and other related documents were found to be false or back-dated and to have been prepared by or at the instigation of Mr Patel.
3. The court declined to make a binding declaration of share ownership because key parties (Ms Shah, Nyconnit Jersey, and Rajendra’s estate) were not before the court and the petitioners alternatively asserted a position that would leave them in effective control (making s.994 inappropriate for final relief on that basis).
4. The petitioners failed to establish the asserted equitable “2007 Understandings” or a quasi-partnership basis sufficient to secure relief under s.994.

Result: The petition was dismissed. The judge recorded factual findings intended to assist any future proceedings, but refused declaratory relief or s.994 remedies.

This was a first-instance hearing. The petition under section 994 of the Companies Act 2006 is dismissed. The court found that the petitioners had not established unfair prejudice on the pleaded basis; that key factual issues concerning share entitlement turned on historical allotments and transfers (with the court finding the 2003 allotments to have been authorised but a later series of 2006 returns and supporting documents to be false and created by or at the instigation of Mr Patel); and that it would be inappropriate to grant declaratory relief as to share ownership while interested parties were not properly before the court.