REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)
1 This is yet a further application to add another participant alleged to be involved in the maritime frauds, which the Suzlon parties, who are the second cross-claimants in these proceedings, claim to have had perpetrated on them. In my judgment, Beluga Shipping GmbH v Suzlon Energy Limited [2009] FCA 1020, I identified the shadowy role that a company variously described as "BIP" and "BIP Holding Limited" or "BIP Holdings" appeared to have had in part of the matters then relied on by the Suzlon parties: see Beluga [2009] FCA 1020 at [7]-[9], [20].
2 The Suzlon parties have today filed in court a second cross application and a further amended statement of second cross claim, joining BIP Holdings Limited, a British Virgin Island Company that was incorporated on 18 July 2007. The reason for this joinder is set out in the affidavit of Siddharth Jhawar, affirmed on 3 November 2009. He noted that Mr Vagadia's affidavit, on which I relied in my earlier judgment, had shown that a total of USD1,800,000 had been transferred by MIT from payments it had received from one or more of the Suzlon companies.
3 I detailed in my earlier judgment how the first USD1,000,000 payment occurred. Mr Vagadia's affidavit disclosed that subsequently, in late October and early November 2007, MIT received from Suzlon companies a further sum of about USD1,200,000. On 12 November 2007, MIT paid USD800,000 to an entity it described as "BIP Holding, Zurich". On 13 December 2007, the chief executive officer of MIT, Mr Patricot, sent an email to Mr Bangad identifying significant currency movements of many millions of dollars through MITs accounts, including the two payments to "BIP Holding Ltd, Zurich".
4 On the day Mr Patricot sent the email, as he noted, MIT had received another USD966,000 from a Suzlon company, notwithstanding that one of MIT's officers apparently had told Mr Bangad that MIT was not satisfied about the way in which these monies were being paid to it and MIT was being required to disburse them. Mr Patricot's email said that MIT was "…missing vouchers and we didn't want to receive any more funds". At the end of the email, he demanded that the Suzlon parties provide original authorities supporting the basis on which the payments had been made to MIT and it had been required to disburse them. He noted that this was an internal audit requirement for the company. He also required original letters from, among others, "BIP Holding, Zurich", for each payment it had received and the reason for that payment and from Suzlon giving instructions for each payment. He required each letter to be dated on the day of the receipt of the funds. After demanding that these documents be received, at the latest, by 21 December 2007, Mr Patricot concluded by stating to Mr Bangad:
"I am ready to travel to Zurich to visit BIP Holdings if it is necessary, but all that I require is absolutely imperative."
5 Mr Jhawar said in his affidavit that on about 1 November 2009, he was re-reading my earlier judgment and noticed a reference to the British Virgin Islands. He said that it had not been thought necessary to do a company search there earlier in order to trace where the entity, BIP, whatever its true name was, might be located. After reading that reference, he reviewed the second affidavit affirmed by Captain Malhotra on 13 March 2009. Then he noticed that the email set out in part in Beluga [2009] FCA 1020 at [8], apparently sent by Mr Bangad, had referred to "a BVI company as a shareholder". Later in the email, Mr Bangad said "we would later bring BIP, as shareholder of the company, by which time the transactions would havs [sic] started, which will make the transfer easier".
6 After re-reading this material, Mr Jhawar formed a suspicion for the first time that BIP might be incorporated in the British Virgin Islands. He gave instructions later on 1 November to the Suzlon parties' Australian solicitors to make a company search, and received the results of that search on 3 November. It disclosed that a company was incorporated in the British Virgin Islands under the name, BIP Holdings Limited.
7 Mr Jhawar referred to a purported letter of instruction dated 1 October 2007 from Suzlon Energy Limited, the first cross-claimant, requiring MIT to make the payment of the initial USD1,000,00 to BIP to a specified Credit Suisse bank account in Zurich, Switzerland. Mr Jhawar expressed the belief that BIP unlawfully received the whole of the USD1,800,000 into the Credit Suisse account in Zurich.
8 I am satisfied that the material in respect of BIP Holdings Ltd now relied on by the Suzlon parties raises a sufficient prima facie case of BIP's involvement in the maritime and other frauds allegedly perpetrated by Mr Sridhar and Mr Bangad, for the reasons that I gave in Beluga Shipping GmbH v Suzlon Energy Ltd [2009] FCA 1020, and Beluga Shipping GmbH & Co KS "Beluga Fantastic" v Headway Shipping Ltd (No 2) (2008) 251 ALR 620. The Suzlon parties seek a freezing order in respect of the sum of AUD2,500,000, on the basis that in the nearly two years since the US currency sums were expended, they will have attracted interest and, at the moment, have a reasonable equivalence to the sum sought.
9 I am satisfied that there is a sufficient prima facie case for that relief. In addition it appears likely that the company, BIP, was incorporated in the British Virgin Islands by or on the instructions of Mr Sridhar and/or Mr Bangad in July 2007. And by 25 September 2007, they intended that BIP would be operated in the way I have described, probably under the direction of Captain Anil Gupta.
10 Both Mr Sridhar and Mr Bangad remain in magisterial custody, facing criminal charges in India for the alleged fraud. There is a possibility that Mr Sridhar and Mr Bangad may be released from that magisterial custody later today, when a part heard bail application resumes in the Indian courts.
11 Given the nature and sophistication of the alleged fraudulent activities, I am satisfied that it is reasonable, in the circumstances, to make a freezing order in the terms sought having regard to the matters to which I have been referred today and the matters I considered and found in Beluga [2009] FCA 1020.
12 There is one difficulty, perhaps occasioned by the urgency which the present application has involved. That is, that the material provided for the purposes of satisfying the requirements of O 8 r 3, does not disclose whether the proposed method of service of BIP, by leaving documents at its registered office, is affected by any convention referred to in O 8 r 3(3)(c)(i). I am, however, satisfied that if a convention does not apply, then, prima facie, the documents may be served by leaving them at the registered office of the company as disclosed in the search report and letter dated 3 November 2009 of Harney Westwood & Riegels solicitors in the British Virgin Islands. I am satisfied that this is an appropriate case in which to grant leave to serve BIP in the British Virgin Islands with the second further amended second cross-claim, because the Court clearly has jurisdiction in the proceedings, and they are of a kind referred to in item 18 in the table in O 8 r 2. This is because BIP will be properly joined as a party to these proceedings which have been duly commenced here: see also Beluga (No 2) 251 ALR at 629 [37]-[38]. It may also be that the Court has jurisdiction in the proceedings to order service out of the jurisdiction under the Admiralty Act 1988 (Cth), but I do not need to decide this.
13 I am satisfied that, having regard to the urgency of the proceedings at the present time and the lack of present information as to whether any convention applies to service there, the proposed method of service will sufficiently bring to the notice of BIP the existence of the claims against it and the orders that the Court is making, for the purposes of the law of the British Virgin Islands. In the event that, through oversight, a convention does apply to service in that jurisdiction, I will grant leave to the Suzlon parties to seek to confirm any irregular method of service, preserving all the rights of BIP to challenge that application as may be appropriate.
14 Once again, for the purposes of giving these reasons, I have formed no final view on any of the allegations but have simply acted on the basis of the evidence before me, recognising that once BIP appears, it may well be able to challenge or draw to my attention matters that would demonstrate that it ought not to have had the orders made against it.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.