Ravi Kumar v. Jain Umesh Chand also known as Umesh Jain

HCA006193/1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Action No. 6193 of 1984

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BETWEEN

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Coram: The Honourable Mr. Justice Sears in Court

Dates of hearing: 23rd - 24th day of October, 1986 27th - 28th day of October, 1986

Date of delivery of judgment: 28th October, 1986

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JUDGMENT

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1. The plaintiff sues for the recovery of monies lent, as he alleges, by him to the defendant. The totality of the loans is US$428,009.86. There is no dispute between the parties that is indeed the total of the sums of money that has been lent. The defendant says lent through him to a company with which he was associated, namely Transworld Associates Co. Ltd., but there is no dispute that the money has passed from the plaintiff out of his hands to the defendant or, at any rate, to the defendant's company.

2. The defendant denies, however, that the loans were personal because the plaintiff sues the defendant in his personal name. The defendant alleges that the monies were lent to a company, as I have said called, Transworld Associates Co. Ltd., which carries on business and is incorporated in Thailand.

3. The issue, therefore, between the parties is relatively short and is essentially an issue of fact. The history of this matter is of importance. The plaintiff gave evidence. He is a man of obvious business ability. He lives in Paris and has businesses in Europe and he is a member, because of his name, of a sect and is a practising vegetarian and is interested in the Jain religion. In about March or April 1980 he met the defendant, being introduced by the defendant's elder brother who knew that he was going to Katmandu. He had known the Jain family, a prominent family in India, for many years and there was what is called the Jain religion of businessman. He met, as I said, the brother of the defendant and he went to Katmandu and met the defendant there. It was apparent, according to him, that the defendant was a man of some substance. He had a large house standing in two acres, a fleet of cars and he saw the defendant on a number of occasions. As far as he was concerned, the defendant appeared to be a man who was, as he said, well-off. He left Katmandu and received a letter from the defendant and towards the end of 1980, about December 1980 to January 1981 he was back again in Nepal where he met the defendant and, as it often happens among businessmen, conversation turned to business. The defendant told him that he had a building venture in Bangkok and he was building a penthouse and it was going to cost about US$7 million. It was near completion but he had fallen short of funds. He wanted to borrow some US$200,000 and the plaintiff pointed out to him that the rate of interest at that time was relatively high and he said he would pay some 18% interest. The plaintiff said that he had US$120,000 available at about that time and I have no doubt, at all, that what was really happening was this that the defendant saw an opportunity to borrow monies from the plaintiff, he being a man of some substance; it may be that the defendant himself was in financial difficulties and it may be that he utilised his relationship with the Jain family and the religious content which that has in order to exert some influence over the plaintiff to lend him sums of money. At any rate, the plaintiff, as would appear later, behaved, I may say, in a rather naive manner. Perhaps it is understandable with people, even of high business acumen, when they allow their personal feelings really to overtake their normal business experience which they have.

4. What happened then was that the defendant gave the plaintiff a Hong Kong bank account number, that is found at page 80 of the bundle. That number was a personal account which the defendant had at Hong Kong and Shanghai Bank and he also gave him a card, found at page 81 which had written on it S. Goel who figures in this case, Beam Investment Company, 39 Wyndham Street, with two residential telephone numbers of Mr. Goel. What then happened was that the plaintiff spoke to his bankers in Basel, Mr. Ludin and he told the defendant about Mr. Ludin's telex number and that he was awaiting instructions and again it seems an unusual sort of that act for a respectable, experienced businessman to adopt in this way but nevertheless he was obviously influenced by the fact that the defendant was, as he appeared to be, a man of substance and a man of respectability because he was connected with the Jain family and, as I have said, the religious background which that family has.

5. What happened thereafter, I would detail in a little moment was that large sums of money flowed from the plaintiff or on instructions from the plaintiff's relation; large sums of money were transferred to the defendant in ways which I shall detail in a moment and the sums of money should have been repaid within a short period of time. They were not repaid. There were a number of occasions when the plaintiff saw the defendant and he was always foisted off with an account that the building in Bangkok which was hoped to be sold was not quite sold. It was not near completion.

6. As I have said, this case involved a short issue of fact and I have had an opportunity of listening to both the parties in this case and listening to the way they gave their evidence in the way they were cross-examined, and I have no doubt whatsoever that the plaintiff is a man of truth and I find that his evidence should be believed. As for the defendant, however, I think the most charitable thing I can say about the defendant is that it may be that when he says to me that he cannot remember certain things that his recollection is at fault. I think he is a dishonest man. I think he deliberately utilised his connection with the Jain family to get money from the plaintiff. Whether or not he ever had any intention of repaying the money is a matter open to doubt. My personal view is that I doubt that he ever intended to repay the money. The money was utilised, he tells me, for the purpose of obtaining back to back loans to Transworld. It may be that some of the money was utilised for that purpose, being funnelled through this company called Beam Investment which he had in Hong Kong with Mr. Goel, but it may also be the truth of this case that the money was utilised by the defendant for his own purposes. He had a textile business and this was running into trouble and it may be he had other personal problems. I think he is a thoroughly dishonest man and I reject his evidence insofar as it conflicts with the plaintiff's evidence.

7. What happened insofar as the transactions of money are concerned that set out in the amended statement of claim starting on 24th February, 1981; the first US$20,000 was funnelled through a company called Sara International in Hong Kong. There was a request made by a telex which is found at p.5 and in my judgment these initial payments really do give the indication of where the truth in this case lies. The first telex which is found at p.5 is a telex sent to Mr. Ludin from Sara Hong Kong and the plaintiff tells me that it is not his telex and I accept that. What had happened was this was a telex, in my judgment, sent by the defendant or, at any rate, sent by Sara Hong Kong on instructions of the defendant. He telling me that he was associated with someone in that company. But whatever the position is, there is the telex going to Mr. Ludin and quoting a Wing Hang Bank Ltd. number and US$20,000 goes to that company and that is confirmed at p.78 of the bundle. Similarly, on 16th March that is a second payment, again US$93,000, goes to Sara International and these were arranged clearly by the defendant himself.

8. On 14th August, 1981 a transfer was made to the defendant's account in Hong Kong; that is found at p.233 and 234 of the bundle of affidavits which is a part of the bank account in the personal name of the defendant at the Hong Kong Bank, and I have no doubt that all those sums of money did go into the defendant's account albeit represented in Hong Kong dollars.

9. As far as the fourth payment is concerned, that is set out at paragraph 4 of an affidavit which has been sworn; it is found at p.216 of the bundle, the request being made at p.220 and other relevant pages at p.228 and 233. On 23rd October US$30,000. is transferred. That is found at paragraph 5 of that same affidavit. Pages 216, 223 and 225 are relevant. The monies going eventually into the Indian Overseas Bank.

10. As far as No. 6 is concerned, US$25,000 has been transferred to Hong Kong, being found at pages 216 and 225. As far as No. 7 is concerned, this was a payment direct from the Union Bank into the Bangkok Bank of the defendant's company and the defendant says, well here is an indication that the money had been transferred to the bank and therefore the loans were indeed from the plaintiff to the Thai company. But the request is found, in a letter, at p.16 from the plaintiff; this starts it off. At page 20 there is a telex which the defendant sent asking for the money to be transferred. At page 110 the money goes over. And this again is a clear indication that this was the defendant arranging, because of really the good nature of the plaintiff who quite frankly, one would have thought by this time, would have realised that he was being utilised for fraudulent purposes. It was the good nature of the plaintiff allowing this to happen and it caused the defendant, being a man of opportunity, decided to make use of it.

11. As far as the eighth payment, US$150,000, going out on 4th February, to be B.N. Finance. The defendant told me he did not know about that company. That I think was a lie. I think he obviously knew about that company. Page 15 of the bundle is the request. Page 21 is the telex. It appears to come from the plaintiff but the telex number is the Mandarin Hotel in Hong Kong. The defendant was staying there. I have no doubt that the defendant sent the telex which is found at page 21 saying that the money has got to be transferred to B.N. Finance, Hong Kong Ltd. What that company is again a metter of some speculation. Apparently they do not exist in the present time.

12. No. 9 goes out on 25th March, 1982. Again that is found at p.216 para. 6 of the affidavit and p.226 is also a relevant page.

13. As far as these sums of money are concerned, the defendant admits that they all went from the plaintiff, he says, for the purposes of the company and he says that the agreement between the parties was that the plaintiff would lend money to the defendant's company. That, in my judgment, is dishonest. I do not suggest that the defendant's recollection is at fault. I think he has deliberately lied. I think he is a man of dishonesty and it is right that I should so state that the loans were made clearly to him. As I have said, what the monies were used for is open to some doubt, but the monies were used by him.

14. He gives an account in the pleadings when further and better particulars were asked for; he says that sums of money were being paid to Beam Investment or this gentleman called Mr. Goel whom I have not had the opportunity to see or Sara International; they would then be encashed and they would be carried by hand to Bangkok. I reject that account. I think that again is a dishonest account which has been given. It completely is at odds with the defendant's evidence when he says that these monies were used as payments for back to back loans.

15. I granted the defendant a short adjournment to enable him to present any documents which he wanted and I was shown a number of documents which indicate that there were certain guarantees outstanding at Hong Kong banks to guarantee either overdraft or loans of money in Thailand. That indeed may be so and I had a gentleman called Mr. Goswaymi who was a New Delhi advocate and he told me that he acted for the Jain family in tax matters and he obtained certain documents from the directors of the Thai company and they wanted to try to get the bank to take over some of the assets, as some of the buildings were partly completed. As I have said, it is not necessary for me to go into what was going on in Thailand, but again I have no doubt that the original venture may well have been the building of a penthouse which had been completed. What the defendant did with the money I know not.

16. The plaintiff tells me that the only occasion when he was told about the company was when he went to see the defendant in Nepal and he saw him in prison. The defendant tells him he was not really in prison; it was a sort of detention cell attached to a police station. The plaintiff says this was prison and the people were in the cells. Whatever the correct terminology to apply to Nepalese places of detention, I have no doubt at all that the defendant was detained by the lawful authorities in some form of prison cell under arrest, and it was in October 1982 that the plaintiff said "What about my money that you owe?". The defendant again kept telling him that he would be repaid and asked the plaintiff to go to see his brothers and his loans were secure. This again was stalling for time. as has been apparent throughout this trial. The defendant has merely utilised time as the method by which he does not pay the sums of money and unfortunately the plaintiff, if he has a fault, it is that he has been a gullible man in believing the defendant's story. As I have said I have little doubt that the defendant never intended to repay any of this money and this was a complete story that he was fabricating. It is a typical type of approach used by people of fraud to convince their victim that they would ultimately get the sum of money that was owing.

17. It was at this meeting in October 1982 that the defendant mentioned about Transworld. I have seen no documentation whatsoever from the defendant to indicate that the agreement between the parties was a loan between the plaintiff and some company. I would have thought that as the money was being funnelled through Hong Kong, through a company called Beam Investment Ltd. that there could well have been some argument by the defendant that it was a loan to Beam Investment but presumably the defendant does not want that to happen because apparently Beam Investment is still trading. Whether it has any money is another matter but the Thai company is obviously worthless and the defendant wishes to protect himself. He is, at the moment, I am told, on an employment visa working here, so he says for some small amount of money. Again I do not necessarily believe that he is telling the truth or not at all, but it is not relevant insofar as this judgment is concerned. All I have to be satisfied is that there was an agreement between the plaintiff and the defendant personally.

18. In 1983 the plaintiff was being advised by a gentleman, an Australian lawyer who made a slightly different approach from a lawyer in Hong Kong who no doubt would probably issued a writ straightaway in this case. What the plaintiff was trying to do was trying to get someone to pay him. He, having advanced a very substantial sum of money and he was having certain problems with his own bankers and therefore there were a number of meetings and letters were written. I do not think it necessary to go through all of those documents for the purpose of this judgment.

19. There is, however, a letter dated 9th May, 1983 signed by the defendant which says "My dear Ravi, I confirm that the following sums were received by me for the project of Transworld Associates Ltd. Bank of Thailand.", and then he sets out the totality of the money; saying he was sorry for the delay. It is on a letter heading of the defendant, a personal letter heading, nothing to do with a company. It is clearly an acknowledgement of the fact that the loans were loans made to him personally. He sets out that it was for the project of Transworld Associates. As I have said, I have the strongest doubt that the monies were utilised for any Thai project. My view of this case is that a lot of money went into the pocket of the defendant for his own purposes. He was misusing the money and persuading the plaintiff, whom I have said, was acting in a very gullible manner. At any rate, this is an acknowledgement of the defendant. The defendant tells me that he was asked to do this. That may well have been so, but it is still an acknowledgement. It is not, in my judgment, necessary for me to be persuaded by this letter but I am perfectly satisfied on the oral evidence I have heard that the defendant is a liar.

20. There is also evidence from a gentleman called by the plaintiff, Mr. Hancocks, who was an agent from V. Co. Ltd. and he said he saw the defendant at Beam Investment, 39 Wyndham Street. He met a man called Goel. This was the gentleman apparently who had carried large sums of money in bags into Thailand and told him that the defendant was in a meeting and eventually Mr. Hancocks saw the defendant. He confirmed that he was indeed the defendant and Mr. Hancocks said that he had been appointed by the lawyer in Australia on behalf of the plaintiff. Mr. Hancocks whose evidence I totally accept said that the defendant originally denied any loan of money and said that it was a loan to the family. There was then a further discussion. Mr. Hancocks said that he had told the defendant that the money had been lent personally and then the defendant agreed this was so. The defendant says that it was not necessarily such an admission. Again that is evidence which would be important if I had any doubt at all in this case. As I have said I have no doubt whatsoever on the issue of fact. As I have said the plaintiff is a perfectly honest man. The loans were made by him to Mr. Jain, he not knowing anything about some Bangkok company.

21. The defendant, I find, to be a man of dishonesty. Again it does not necessarily convince me but he was in 1985 sentenced to prison in India for fraudulent matters and dishonouring cheques, but he now apparently is in Hong Kong, saying that he is working here.

22. As I have said there is no dispute as to the amount of money. There is no dispute that in 1982 when the plaintiff and the defendant met on one of their visits and the loans were continuing that the rate of interest was increased from 18% to 20%. It surprises me that the plaintiff allowed this situation to continue in the way he did, and no doubt he bitterly regrets getting involved with this man. He thought he was an honest man and a man in substance, but in reality, he was a dishonest man and a man of straw.

23. In my judgment, I am perfectly satisfied on this evidence that the loans of money were made by the plaintiff to the defendant. There is no dispute as to the amount. There is no dispute that the monies have not been repaid and therefore there will be judgment for the plaintiff for the amount claimed in the re-amended statement of claim together with the appropriate rate of interest up to the date of the issue of writ and this sum has been quantified at US$732,301,30. I therefore give judgment for that sum of money or the equivalent in Hong Kong dollars as at today's date, plus interest from the date of the writ to today's date at the contractual rate.

Representation:

Mr. Peter Clayton, instructed by Messrs. Chow, Griffiths & Chan, for the plaintiff.

Mr. Jeevan Hingorani, instructed by Messrs. Y.K. Poon & Co., for the defendant.