Isle of Man court can hear fraud case filed against Mumbai-builder Hiranandani
MUMBAI: The Isle of Man appellate court last week rejected builder Niranjan Hiranandani’s appeal, challenging its jurisdiction over a case of fraud and misconduct filed against him by Hirco Plc.
Hirco, a property investment fund, had raised Rs 3,000 crore from global investors in 2006, to be invested in Hiranandani’s two township projects in Panvel and Chennai. In February 2013, the company sued Hiranandani and his daughter, Priya Hiranandani-Vandrevala, alleging that they had committed fraud and other misconduct prior to their resignation as chairman and CEO in 2010.
The claim seeks damages of almost £303 million (around Rs 3,000 crore). The allegation is that the Hiranandanis used the funds to acquire 588 acres in Panvel and 368 acres in Chennai and sold 4,324 flats. The Rs 1,406 crore from sales allegedly was not shared with Hirco.
“Hirco expects that its claims against the Hiranandanis will now be dealt with expeditiously as the lower court had noted that the courts of the Isle of Man have a legitimate interest in ensuring that claims in fraud and claims in respect of breaches of directors’ duties…are dealt with expeditiously,” said a statement released by Peter Barge, Hirco’s senior non-executive director.
Hiranandani had contented that notwithstanding the fact that he was Hirco Plc’s chairman during the relevant period, he owed no duty to the company. But the court found this “highly unlikely”.
A statement issued by Hiranandani’s spokesperson said, “It has been clear to Hiranandani for a long time now that despite his best efforts to persuade Hirco Plc that the better course would be to rejuvenate the projects in the interests of the thousands of individual homebuyers, the board of Hirco Plc has lost all interest in the projects in which it invested, and is instead intent on squandering its investors’ remaining funds in the pursuit of a contrived litigation strategy, by which it seeks to force a settlement through commercial pressure.”
A statement issued by Hirco said the board is satisfied with the “most recent development in the Isle of Man as well as the developments in the Singapore arbitration”. “Hirco Plc board is again gratified by the Isle of Man’s efforts to police allegations of fraud and other misconduct in connection with Isle of Man companies. Hirco Plc is looking forward to publicly trying its claims for fraud and other misconduct against the defendants and recovering damages in excess of £300 million.”
Hirco claimed it was to receive cash returns of £1 billion (approximately Rs 10,000 crore) on its investment by 2012, but got nothing. It further alleged that the Mumbai-based builder “made and conspired in making fraudulent misrepresentations to them, which induced them to invest £350 million in two large-scale Indian real estate projects to be developed by entities associated with the Hiranandani family”.
