Naresh Kumra and Another v. Jmatek Ltd and Another
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HCMP 2287/2025 [2026] HKCFI 4939 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2287 OF 2025 ________________
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________________ D E C I S I O N ________________ 1.I have before me two summonses. The first issued by the 2nd Respondent to set aside an order of Master To made on 21 January 2026 granting substituted service of the Petition on the Respondents (“Master’s Order”), both of which are companies incorporated in the British Virgin Islands (“BVI”). I note that the 1st Respondent (“Company”), which is now in liquidation in the BVI has not applied to set aside service. The Court received a letter from the liquidators dated 10 July 2026 asking for permission to be excused from attendance, which I allowed. The second summons issued by the Petitioners seeks an order granting leave to serve the Respondents out of the jurisdiction. 2.Although, I have received comprehensive submissions from counsel it seems to me that once one has understood what has happened the determination of the summonses becomes straightforward. 3.The Petitioners between them own 23.1% of the Company. The 2nd Respondent owns the remaining shares and is, thus, the majority shareholder. It is ultimately owned by the Varma Family, who are based in Hong Kong as is the 1st Petitioner, who owns the 2nd Petitioner. The Company is in the air treatment equipment business. Its operating subsidiaries are Hong Kong companies. The Petition has been brought under ss724 and 725 of the Companies Ordinance, Cap. 622 (“Ordinance”) seeking relief for allegedly unfairly prejudicial conduct. The details of the conduct are not relevant to the determination of the summonses. 4.A foreign incorporated company, which has not registered in Hong Kong can be served with an originating process in one of two ways. If it has an established place of business in Hong Kong (“place of business”) it can be served by leaving the originating process at the place of business: see s803(3) of the Ordinance. The second is by obtaining an order pursuant to the Order 11 of the Rules of the High Court, Cap. 4A (“RHC”) granting leave to serve the originating process out of the jurisdiction if the requirements of the order are satisfied. I understood the parties to accept that if a foreign company has a place of business it must be served there and an application pursuant to O11 of the RHC is both unnecessary and inappropriate. 5.In the present case the Petitioners proceeded on the basis that the Respondents had a place of business. They had trouble serving the Petition by registered post. They, therefore, sought an order for substituted service, which was granted. In my view the order should not have been granted. I accept for present purposes that there maybe cases in which the evidence demonstrates that a foreign company has a place of business in Hong Kong, but for practical reasons, such as difficulty of entry, it is not possible to serve at the place of business and in that situation an order for substituted service may properly be granted. However, that was not the basis on which the order for substituted service was sought and the evidence filed for the purposes of that application does not support the conclusion that service at the place of business was not possible, because the evidence relied on was that the copies sent by mail to the place of business were returned and there is no evidence that personal service in the sense of leaving the documents at the place of business was attempted or that, if it had been, it was likely to have been unsuccessful. In my view the substituted service was defective and should be set aside. I will, therefore, set aside the Master’s Order. 6.As I have already mentioned in case I reached this conclusion the Petitioners have issued an application for service out of the jurisdiction. This, as I understand it, was thought necessary to cater for the event that I took the view that the order for substituted service was not properly granted and/or that it had not been proved that 2nd Respondent had a place of business in Hong Kong. The 2nd Respondent disputes that it has a place of business in Hong Kong; specifically that, as the Petitioners contend, it has a place of business at suite 808A, Tower A, Manulife Financial Centre, 223-231 Wai Yip Street, Kwun Tong. Cases and evidence have been put before me explaining what constitutes a place of business, why the Petitioners believe that the 2nd Respondent has one in the Manulife Building and why the 2nd Respondent says this is wrong. However, as the 2nd Respondent does not oppose an order for service out it is difficult to see why the 2nd Respondent has bothered to apply to set aside the order other than to disrupt the progress of the proceedings and with indifference to the waste of judicial resources and public money that would result. 7.As service on the 1st Respondent is not challenged by the 1st Respondent and the 2nd Respondent has not advanced a positive case that the 1st Respondent was not properly served, given the nature of the claim, on the face of the matter it would seem clear that O11 r1(1)(c) of the RHC is engaged. Whilst not opposing the application for service out the 2nd Respondent did flag a matter for consideration in determining whether the application should be granted, namely, that service on the Company did not automatically engage O11 r1(1)(c) of the RHC unless it was a necessary party. It cannot be made a party simply to satisfy O11 r1(1)(c) of the RHC[1]. In my view the Company is a necessary and proper party. It may be necessary for it to give discovery, and it may be affected by any relief granted; possibly with an order directed to it causing a change of shareholders or itself to purchase the shares, which is one of the reliefs sought in the Petition. 8.So far as the impact of the liquidation of the Company is concerned, it has not been argued before me that it necessarily follows that the buyout order sought is pointless, because the shares are valueless. If I have been faced with compelling evidence that the shares were worthless this might have impacted on my decision[2] whether to grant leave, but as this is not the case it does not seem to me to be an impediment to granting leave, which I do. I will, therefore, make an order for service out of the jurisdiction on the 2nd Respondent as sought in the Petitioners’ summons. 9.So far as costs are concerned I will make a costs order nisi that the costs of the Petitioners’ summons dated 17 June 2026 be in the cause of the Petition. The costs of the 2nd Respondent’s summons dated 15 April 2026 will be in the cause of the Petition to reflect the court’s dissatisfaction with its resources having been unnecessarily engaged. I grant a certificate for counsel in respect of both summonses.
Mr Tommy Cheung, instructed by Bowers, for the 1st and 2nd Petitioners Mr Kwan Ping Kan, instructed by Charles Russell Speechlys LLP, for the 2nd Respondent The attendance of Withers, for the 1st Respondent, was excused [1] Hong Kong Civil Procedure 2026, [11/1/31]. [2] See generally, Re Li Fu Hua v Chen Ching Chih [2018] HKCFI 2786, [9], Re Shih Hua Investment Co Ltd v Zhang Aidong [2021] 1 HKLRD 1376, [16] & [19], Re Tobian Properties Ltd [2013] Bus LR 753, [11] – [12]. |
Cases cited in this judgment