Chowgule & Company Private Ltd & Anor v Pratap Shirke & Ors
[2023] EWHC 2815 (Comm)
Sunil Gupta & Anor. v Olgun Halil Shah & Ors.
15 March 2023
[2023] EWHC 540 (Ch)
High Court
Someone was scammed out of $14 million. The scammer and his family received the money, but the court ordered them to return it because they were dishonest and broke the law. The court also rejected the scammer's claim that the victim's money was dirty money.
Key Facts
- •Dr. Gupta (Claimant) alleges fraud by Mr. Shah (Defendant) involving a US$14 million investment scheme.
- •Funds were transferred from Dr. Gupta to Mr. Shah, held on trust, and subsequently misappropriated.
- •Funds were traced to Mrs. Shah (Defendant) and their children (Defendants).
- •Defendants did not attend the hearing and were unrepresented.
- •Mr. Shah claimed the investment was from illegal sources and later presented a fabricated 'switch' of funds to a Citibank account.
- •The Citibank account in question did not contain the alleged funds, and the 'switch' claim was deemed false.
- •Mrs. Shah claimed to have received funds innocently, believing them to be her husband's.
- •The children claimed innocent receipt and returned funds to court.
- •A freezing order was in place against all defendants.
Legal Principles
Summary judgment test under CPR 24.2
CPR 24.2
Realistic prospect of success, not mini-trial
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Caution in fraud cases involving dishonesty
Wrexham Association Football Club v Crucialmove Ltd [2006] EWCA Civ 237; Rahbarpoor v Suliman [2021] EWHC 2686 (Ch); Foglia v The Family Officer Ltd & Ors [2021] EWHC 650 (Comm)
Equitable tracing and following of trust funds
Not explicitly cited, but applied throughout the judgment.
Constructive trust based on knowing receipt or dishonest assistance
Not explicitly cited, but applied to Mrs. Shah.
Requirements for pleading illegality
Chancery Guide 2016; Commercial Court Guide
Ex turpi causa non oritur actio (no action arises from a base cause)
Mentioned as a defense, but rejected.
Outcomes
Summary judgment granted against Mr. Shah for breach of trust.
Clear breach of trust; misappropriation of funds; dishonest conduct.
Summary judgment granted against Mrs. Shah for proprietary claim to funds paid into court.
Receipt of trust funds without consideration; simple tracing.
Mrs. Shah allowed to defend the remainder of the claim (knowing receipt/dishonest assistance).
Insufficient evidence to establish dishonesty at the time of fund disbursement; complexity necessitates trial.
Summary judgment granted against children for proprietary claim to funds paid into court.
Receipt of traceable trust funds; lack of genuine defense.
Allegations of Dr. Gupta's illegal sources of funds struck out.
Insufficient particulars; speculative and improper pleading.
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