Khan v Nallamothu & Ors [2005] EWHC 2124 (Ch) (06 October 2005)

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England and Wales High Court (Chancery Division) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Khan v Nallamothu & Ors [2005] EWHC 2124 (Ch) (06 October 2005)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2005/2124.html
Cite as: [2005] EWHC 2124 (Ch)

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		Neutral Citation Number: [2005] EWHC 2124 (Ch)
		Case No: HC05C01883

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

6 October 2005

B e f o r e :

RICHARD SHELDON QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
____________________

Between:

	TANZEEM SHABBIR KHAN	Petitioner
	- and -
	SATYA NARAYANA NALLAMOTHU SHAIK AKBAR BASHA LONDON COLLEGE OF BUSINESS STUDIES LTD COLLEGE OF PROFESSIONAL STUDIES LTD CARLTON IT LTD	Respondents

____________________

Rafaquat Hussein (instructed by Solomons) for the Petitioner
Mark Watson-Gandy (instructed by Crimson Phoenix) for the Respondents
Hearing dates: 13-16, 19,21,26,27 September 2005
____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

Richard Sheldon QC (sitting as a Deputy Judge of the High Court):

Introduction

This is the trial of the following preliminary issues ordered to be determined by Peter Smith J on 16 August 2005 in proceedings brought under s. 459 of the Companies Act 1985 ("the 1985 Act"):

(a) The historic and present shareholding in each of the third, fourth and fifth Respondents, namely London College of Business Studies Ltd ("LCBS"), College of Professional Studies Ltd ("CPS") and Carlton IT Ltd ("Carlton").

(b) The historic and present holders of office as directors and company secretary of each of LCBS, CPS and Carlton.

He also ordered that declarations and orders for rectification be made commensurate with those findings.

On 28 July 2005 Peter Smith J. had ordered a speedy trial, the parties having given undertakings as to the continuation of the businesses of LCBS, CPS and Carlton, and gave directions accordingly. Such directions were subsequently modified by his order of 16 August 2005 which also limited the issues to be determined at the date fixed for the trial to those I have described.

The parties who are individuals accuse each other of attempting to "hijack" the three companies by falsely altering those companies' records at Companies House using the electronic filing facility on the World Wide Web.

The petitioner, Tanzeem Shabbir Khan ("Mr Khan"), says that this occurred from about August 2004 onwards. Mr Khan contends that the Second Respondent, Shaik Akbar Basha ("Dr Basha") fraudulently altered the records of the three companies at Companies House ultimately to show himself and the First Respondent, Satya Narayana Nallamothu ("Dr Nallamothu"), variously as the shareholders and officers of the three companies.

Dr. Nallamothu and Dr Basha say that Mr Khan hijacked the three companies on about 23 June 2005 and thereafter. They say that Mr Khan engineered his hijack by inviting Dr Basha to go on holiday to Spain with him on 23 June 2004 and whilst Dr Basha was still abroad, Mr Khan returned to England and, using the records he had electronically altered earlier on 23 June 2004, gained control of the premises of LCBS and attempted (unsuccessfully) to gain control of the premises of CPS and Carlton.

Mr Khan asserts that he is now director and either sole or controlling shareholder of all three companies. He asserts that Mr Shafique Ahmed is the only other officer of the companies.

Dr Basha and Dr Nallamothu say that they are now the only officers and shareholders of the three companies.

LCBS runs courses in business studies from Montrose House, Eastern Avenue, Gants Hill, Essex and has occupied those premises since about August 2004 ("Montrose House"). Before that date it carried on business from Trocoll House, Wakering Road, Barking, Essex ("Trocoll House"). CPS also runs courses in business studies, but different from those provided by LCBS, from the Trocoll House premises. Carlton shares the Trocoll House premises with CPS and its business is that of providing information technology products and services. LCBS used to have an office at Trocoll House but no longer does so. As a result of the undertakings given to Peter Smith J, pending this trial and subject to restrictions as to the operation of the businesses, the business of LCBS is under the control of Mr Khan and the businesses of CPS and Carlton are under the control of Dr Nallamothu and Dr Basha.

It is necessary to set out in a little more detail the rival contentions on the preliminary issues as regards each of the three companies.

The rival contentions

London College of Business Studies Ltd ("LCBS")

Mr Khan asserts that he is now the majority shareholder and sole director of LCBS and that Shafique Ahmed is the company secretary.

Dr Basha and Dr Nallamothu claim that Dr Nallamothu is now the sole shareholder and director of LCBS and that Dr Basha is the company secretary.

It is common ground that LCBS was incorporated on 12 August 2003 as a private limited company.

(a) Shareholders

It is common ground that on incorporation LCBS' share capital was £1,000 divided into 1000 shares of £ 1 each. It is also common ground that Razwan Ahmed originally subscribed one share (as shown in the Memorandum and Articles of Association).

According to Mr Khan, following Razwan Ahmed's decision to leave LCBS in December 2003, 999 shares were allotted to him (Mr Khan) in January 2004 for which he paid £999. Mr Khan says Razwan Ahmed retains his one share.

This is disputed by Dr Nallamothu and Dr Basha. According to them, LCBS has had at all material times an authorised share capital of 1,000 shares of £1 each of which 100 shares were issued as fully paid up and held as follows:

As to 1 share:

from 12 August 2003 to 1 August 2004 - Razwan Ahmed

from 1 August 2004 to 1 Sept 2004 - John Samuel Bathulla (acquired from Razwan Ahmed)

from 1 Sept 2004 to date - Dr Nallamothu (acquired from Mr Bathulla)

As to 99 shares:

On 13 August 2004, LCBS allotted 99 shares to Dr Nallamothu

(b) Officers

It is common ground that the following have been directors of LCBS:

12 August 2003 to 16 December 2003 - Razwan Ahmed

12 August 2003 to 13 December 2003 - Sofia Bono

16 December 2003 to 3 August 2004 - Zainullah Mohammed

Mr Khan asserts that he was appointed director of LCBS on 4 December 2003

This is disputed by Dr Nallamothu and Dr Basha. They accept that Mr Khan was appointed a director on 4 December 2003 but say that he resigned on 2 August 2004. They rely on a letter to this effect signed by Mr Khan bearing

Dr Nallamothu and Dr Basha claim that the following were also appointed directors of LCBS:

1 August 2004 to 31 March 2005 - Mr John Samuel Bathulla

1 April 2005 to date - Dr Nallamothu

Accordingly, they say that the sole director of LCBS IS now Dr Nallamothu.

As regards the company secretary of LCBS, it is common ground that the

12 August 2003 to 4 December 2003 - Razwan Ahmed

21 August 2003to 24 August 2003 - Mr Khan (joint secretary)

4 December 2003 to 2 August 2004 - Mr Khan

2 August 2004 to 30 September 2004 - Zainullah Mohammed

1 October 2004 to 28 February 2005 - Nurgul Koca

Mr Khan asserts that Shafique Ahmad was appointed company secretary on 1 June 2005 and still holds that office.

Dr Nallamothu and Dr Basha say that on 1 March 2005 Dr Basha was appointed company secretary and remains as such. College of Professional Studies Ltd ("CPS")

Mr Khan asserts that he is now the sole shareholder of CPS, that he and Shafique Ahmed are the only directors and that Mr Khan is company secretary.

Dr Nallamothu and Dr Basha claim that Dr Basha is now the sole shareholder and the company secretary of CPS and that Dr Nallamothu is the sole director.

It is common ground that CPS was incorporated on 16 March 2004 as a private limited company.

(a) Shareholders

It is common ground that on incorporation CPS' share capital was £1,000 divided in 1000 ordinary shares of £1 each and that Younas Ali subscribed for 1000 shares (as appears from the Memorandum of Association).

Mr Khan claims that Younas Ali transferred all his shares to him in about April or May 2004 for the sum of £2000.

Dr Basha disputes this and says that on 1 August 2004 Younas Ali transferred all his shares to him.

(b) Officers

It is common ground that the directors of CPS were Younas Ali (from 16 March 2004 to 1 August 2004) and Suhail Muzzafar (from 16 March 2004 to 31 March 2005).

Mr Khan asserts that he and Shafique Ahmad were appointed directors of CPS on 1 June 2005.

Dr Nallamothu and Dr Basha say that Dr Nallamothu was appointed a director on 1 April 2005 and remains the sole director.

It is common ground that the company secretaries of CPS have been: 16 March 2004 to 30 September 2004 - Younas Ali 1 October 2004 to 31 March 2005 - Nurgul Koca

Mr Khan asserts that he was appointed company secretary on 1 June 2005 and remains as such. Dr Basha says that he was appointed on 1 April 2005 and remains company secretary.

Carlton IT Ltd ("Carlton").

Mr Khan asserts that he is now the majority shareholder of Carlton, that he is the only director and that Younas Ali is company secretary.

Dr Basha and Dr Nallamothu claim that Dr Basha is now the sole shareholder and director of Carlton and that Dr Nallamothu is the company secretary.

It is common ground that Carlton was incorporated on 30 December 2002 as a private limited company.

(a) Shareholders

The memorandum of association of Carlton discloses that its share capital is £ 1 000 divided into 1000 shares of £1 each. On incorporation 1 share is shown as having been subscribed by each of two formation agents (Report action Ltd and 1^st Cert Formations Ltd).

Mr Khan claims that he purchased Carlton and that payment was made through his credit card to the formation agents. He says that one share was transferred to himself and one to Dr Basha. He claims that a further 800 shares were allotted to him on I June 2005.

Dr Nallamothu and Dr Basha claim that the sole shareholder of Carlton has at all material times been Dr Basha who has held one share which was transferred to him from Reportaction Ltd on 6 October 2003.

(b) Officers

It is common ground that Younas Ali was a director of Carlton between 3 December 2003 and 2 January 2004.

Mr Khan accepts that Dr Basha was appointed a director of Carlton on 6 October 2003 but says he resigned on 1 June 2005. Mr Khan says that he was appointed on 6 October 2003 and remains the sole director.

Dr Basha accepts that he and Mr Khan were appointed directors on 6 October 2003. However he says that Mr Khan resigned on 1 August 2004. Dr Basha claims that he has not resigned and remains the sole director. He also says that Ms Parvez Runjanally was a director between 30 July 2004 and 30 September 2004: this is disputed by Mr Khan.

It is common ground that the company secretaries of Carlton have been:

6 October 2003 to 30 July 2004 - Dr Basha

1 October 2004 to 28 February 2005 - Nurgul Koca

Mr Khan asserts that Younas Ali was appointed company secretary on 1 March 2005 and remains as such. Dr Nallamothu and Dr Basha say that Younas Ali resigned on 5 July 2005. They say that Dr Nallamothu was appointed company secretary on 1 June 2005 and remains as such.

The evidence

Evidential difficulties

The evidence given by the witnesses directly conflicted over a wide range of matters. As Mr Hussein, who appeared for Mr Khan, observed in closing, this is not a case where the conflicts in the oral evidence could be explained away on innocent grounds: one or more of the witnesses clearly was not telling the truth.

My task in resolving the issues has been considerably hampered by the unavailability of the books and records of the companies. It is common ground that each company maintained a full set of books and records, including a register of members. Each side sought to blame the other for their no production. My task is made all the more difficult by the challenge to the authenticity of a number of documents which prima facie appear to be contemporaneous.

Each side from time to time sought to make something of the fact that matters on which the witnesses gave evidence were not contained in their witness statements. Whilst I do take this into account in considering whether to accept their evidence, I should make the general observation that the witness statements on both sides are, to put it mildly, exiguous and clearly do not fully cover the matters in issue between the parties. This is no doubt due at least in part to the speed with which this matter has come on for trial. As a result, it was not surprising that the cross examination of the witnesses was more extensive than it would have been had full witness statements had been provided. As I point out below, even the witness statements which were produced on occasion did not accord with the oral evidence of the witness and appear not to have been properly understood by the witness before signing.

Further difficulties have been caused by the state of the trial bundles (which were not produced until the morning of 13 September 2005 and contained additional documents and witness statements relied on by Mr Khan which had not previously been disclosed) and the late start in the witnesses giving evidence (the first witness could not be called until 15 September 2005). As a result, the estimate of 4 days was exceeded which resulted in further delays to the trial process.

Since so much turns on the oral evidence, my assessment of the credibility of the witnesses assumes considerable importance in deciding the issues.

Witnesses

The following were called as witnesses for the Petitioner: Mr Khan, Saim Rabbani Choudhary, Muzzafar Suhail and Younas Ali.

The following were called as witnesses for the Respondents: Dr Basha, Dr Nallamothu, Razwan Ahmed, Shaik Abdul Shukur and Mohammad Farooque Khan.

I make the following general observations about the witnesses called by the Petitioner.

I found the evidence given by Mr Khan to be generally unreliable. I explain in more detail below why I make findings that his evidence was in some respects shown to be untruthful and that he has manufactured documents to support his case at trial. He gave evidence in Urdu through an interpreter. He clearly has some understanding of the English language since he has for some time been studying for an M Sc in Information Technology - a course which is conducted in English. It was also apparent when giving evidence that he had some understanding of documents written in English since he did not invariably rely on the interpreter to translate them, and on occasion answered questions from me in English before they had been interpreted. When giving evidence Mr Khan was prepared to make allegations of fraud and impropriety against others, including third parties, when it was clear that he had no grounds for doing so and that this was speculation on his part. His demeanour as a witness was also revealing. He appeared to be comfortable when giving evidence on matters which were not particularly controversial. On controversial matters, he appeared to be uncomfortable and from time to time claimed not to understand the questions being asked, provided answers which were not responsive to the questions being put to him which I consider he clearly understood, or sought to blame others including his legal advisers for apparent discrepancies. On occasion the evidence he gave departed from the way his case had been pleaded in the Points of Claim or presented by his Counsel, Mr Hussein, in opening. For all these reasons, I treat the evidence of Mr Khan with extreme caution unless credibly corroborated.

Mr Choudhary was at the relevant time a student initially at CPS and then at LCBS (where he is still studying for an MBA). At Mr Khan's suggestion, he was employed by LCBS in October 2003 to assist with recruitment and continued in such employment until August 2004. The oral evidence given by Mr Choudhary was not consistent with his witness statement. I consider that the evidence Mr Choudhary gave orally was in general truthful. He also gave evidence through an interpreter. On occasion he responded in English but it appeared that his understanding of English was limited. I formed the distinct impression that he had not fully understood the witness statement which he had signed. I refer to his oral evidence about the alleged board meeting in January 2004 below which was not consistent with Paragraph 4 of his witness statement and much vaguer than there appears. As regards paragraph 5, where he makes allegations of impropriety against Dr Basha (which are not relevant to the issues I have to decide), he did not repeat those allegations orally even though he claimed to understand what he had written (and Mr Hussein's valiant attempts in re-examination to get him to explain paragraph 5 were unsuccessful). His oral evidence did not suggest any impropriety on the part of Dr Basha. In the event, Mr Choudhary's oral evidence did little to advance Mr Khan's case.

Muzzafar Suhail is a manager of a Kentucky Fried Chicken outlet. He claimed to be the Muzzafar Suhail (or Suhail Muzzafar) who was a director of CPS between March 2004 and March 2005. His oral evidence was to the effect that he claimed to be a friend of Younas Ali, the original owner of CPS, and that as such he had been appointed a director of CPS by Younas Ali, even though he accepted that he was unfamiliar with the duties that entailed and in practice performed virtually no acts as a director: he also accepted that he knew nothing about the business of CPS. He claims that he attended a meeting in April! May 2004 at which he says Younas Ali transferred the CPS shares to Mr Khan. The oral evidence of Muzzafar Suhail was not consistent with the witness statement he provided. It was clear that the statement which he signed had been drafted in legalistic terms with which he was not familiar. In giving his evidence, Muzzafar Suhail was at times truculent and at others flippant. For example, when asked about Paragraph 4 of his witness statement (where he said: "I intended Mr Khan to be a director/ secretary of CPS ... ") he said this "was added by Mr Taylor [Mr Khan's then solicitor] - I don't know if he is a tailor – I said 1 don't wind if it Was added by Mr Taylor or Mr Khan - whatever is true I'll sign." In fact the statement in Paragraph 4 was implausible and wholly inconsistent with his evidence about his role (or lack of it) in CPS. Further, whatever connection Muzzafar Suhail had had with CPS, this had come to an end some months before Mr Khan claims that he became a director. For all these reasons, I do not consider that the evidence Muzzafar Suhail gave was reliable. I consider further whether I accept his evidence concerning the alleged transfer of the CPS shares to Mr Khan later in this judgment in the context in which it arises. The identity of this witness was challenged by Dr Basha and it was suggested that the documents he produced (in particular his passport) to establish his identity were fraudulent. Dr Basha said that he had known the witness as Shahid Bhutt. Nevertheless, on the basis of the documents produced by this witness as to his identity (and in particular his passport), I proceed on the basis that this witness was Muzzafar Suhail.

The witness Younas Ali was not the same Younas Ali who had originally been the owner of CPS. The witness Younas Ali came to England in about July 2004 to work for Carlton as an IT programmer and obtained a 5 year work permit. He claims to have been close to Dr Basha and to have shared a room with him when he came to England in about July 2004 although Dr Basha says this occurred later. I find that the evidence Younas Ali gave was infused with bitterness against Dr Basha as a result of Dr Basha's actions in questioning the basis upon which Younas Ali had obtained a work permit (which permit has now been withdrawn). Dr Basha claims that the CV which Younas Ali had provided for the purpose of obtaining his employment with Carlton was false and/or exaggerated: the cross examination of Younas Ali suggested that there was some basis for this claim. Younas Ali sought to downplay his role in assisting Mr Khan to prepare for this trial yet it became apparent that he has been closely involved. I consider that I have to treat the evidence given by Younas Ali with caution. His evidence was in any event not central to the issues I have to decide.

I make the following general observations about the witnesses called by the Respondents.

Dr Nallamothu is a retired psychiatrist who has been involved in a number of business ventures. He was an impressive witness who gave evidence in a clear and consistent manner. I consider that his evidence was in general truthful and reliable. His evidence related principally to the affairs of LCBS. As regards CPS and Carlton, he was unable to give much material direct evidence since he was reliant on what he had been told by Dr Basha.

Dr Basha said that his doctorate was obtained in May 2004 by a degree from India in corporate secretaryship. In giving evidence, Dr Basha was not always convincing. He came across as sharp witted and capable of being manipulative. His answers in cross examination were not always given in a straightforward or forthcoming manner: for example in relation to his role in the businesses prior to 2005. I suspect that this was in part caused by a concern on his part not to give evidence which might be considered inconsistent with his then immigration status. Significant parts of the oral evidence given by Dr Basha were corroborated by the evidence of other witnesses whom I found to be reliable. In those respects in which his evidence was not so corroborated, I treat his evidence with some caution.

Shaik Abdul Shukur ("Mr Shukur") is Dr Basha's brother. He came to England in March 2005 and worked at Montrose House as management accountant. I bear very much in mind that the evidence given by Mr Shukur may have been influenced by loyalty towards his brother. Nevertheless, when giving evidence he was clear and consistent and was candid as to the basis on which he had completed forms which were then sent to Companies House. I consider that the evidence which he gave was in general truthful and reliable.

Razwan Ahmed was the original owner of LCBS as the holder of one share. His evidence was largely contradictory to the evidence given by Mr Khan, but in general consistent with the evidence given by Dr Nallamothu (and Dr Basha). Certain answers given by Razwan Ahmed were not convincing but I consider that the thrust of his evidence was truthful. In reaching this view I take into account the suggestion made by Mr Khan that Razwan Ahmed had been offered £70,000 by Dr Basha to give evidence in his favour. During the course of Mr Hussein's opening he proferred transcribed excerpts to this effect said to have been prepared by Mr Khan and an unnamed friend from an audio CD recording of a meeting between Mr Khan, Younas Ali and Razwan Ahmed held in the early hours of the morning on 13 August 2005. Following directions I gave as to production of the CD to the Respondents, the CD was submitted by them to independent transcribers called "Language Empire". In a letter dated 15 September 2005, they reported that they found that the quality of the recording was so poor that they concluded that it was "illegible": they were therefore unable to transcribe any of it. After their report was produced, I was told by Mr Hussein that by coincidence Language Empire had also been consulted on behalf of Mr Khan and their conclusion was, unsurprisingly, the same. How Mr Khan was therefore in a position to tender a transcribed excerpt is baffling and appears to me to be one of a number of examples of his willingness to seek to manufacture evidence in support of his case. Dr Basha and Razwan Ali denied that money had been paid or proferred in return for Razwan Ali giving evidence in support of Dr Basha's case. I accept their denial.

Mohammad Farooque Khan claims that he was present at a meeting on 12 August 2005 between Mr Khan and Razwan Ahmed. Although somewhat excitable when giving his oral evidence, I have no reason to doubt the veracity of his evidence.

The paucity of contemporaneous documents, and the challenge to the authenticity of documents which appeared to be contemporaneous, gives rise to particular difficulty in deciding whose evidence I should accept. Each side sought to blame the other for the paucity of contemporaneous documents.

The issue of what has become of the books and records of the companies is therefore of some importance in deciding the issues in the case. My conclusions on this issue have a considerable bearing on the credibility of the evidence adduced by each of the parties and on the authenticity of the documents they relied on.

The Companies' books and records

It is common ground that all three companies maintained full books and records including a register of members.

Mr Khan asserts that the books and records of CPS and Carlton were kept at Trocoll House. (Trocoll House has been under the control of Dr Basha and Dr Nallamothu from the time the current dispute broke out.) Mr Khan says that the books and records of LCBS were kept by Mr Shukur at Montrose House but that these were missing by the time he took control of these premises in late June 2005. Accordingly, Mr Khan blames Dr Basha, Dr Nallamothu and Mr Shukur for the non-availability at trial of the companies' books and records.

Dr Nallamothu and Dr Basha assert that the books and records of all three companies were kept at Montrose House so as to be available to Mr Shukur and that Mr Khan is responsible for their non-availability at trial.

The oral evidence of Mr Shukur is important in this context. He supported the assertions made by Dr Basha and Dr Nallamothu. Mr Shukur explained that after he came to England on 10 March 2005, his role as management accountant required him to have access to the books and records of all three companies. He worked at Montrose House and never at Trocoll House. His evidence was that after he was appointed all the records were moved to a separate room at Montrose House next to the computer laboratory which made it easier for him to have access to them. He explained that by books and records, he was referring to minute books, the register of members, invoices and payment records, correspondence including letters of resignation from directors and other accounting records. He stated that all these records were at Montrose House when he was ejected from the premises on 27 June 2005 in circumstances which came as a complete surprise to him (to which I refer later in this judgment).

I accept Mr Shukur's evidence in this regard. I reject the suggestion that was made to him that he destroyed the books and records of LCBS before 27 June 2005.

My acceptance of Mr Shukur's evidence is in part supported by Mr Khan's late disclosure of documents. Mr Khan has produced a number of documents most of which he claims support his case. They comprise documents which would typically form part of a company's accounting records and include documents relating to all three companies. He claims that he found them at the premises of LCBS. It was put to him in cross examination that this shows that he had access to the books and records of all three companies and that he has only disclosed those which he believes support his case. This was denied by Mr Khan whose explanation for the missing documents is as I have described above. Mr Khan's explanation of how he came to be in possession of documents relating to CPS and Carlton despite his assertion that the records of those companies were stored at Trocall House was unconvincing. I regard it as being of some significance that Mr Khan has been in a position to disclose these documents. Although many of the documents were not central to the issues I have to decide, they generally were relied upon in support of his case. The nature of the documents, relating as they do to all three companies, and the apparently limited scope of the documents actually disclosed suggests to me that Mr Khan has access to more. This view is reinforced by the reference in a witness statement of Mr Way (Mr Khan's former solicitor) dated 15 August 2005 to the recent discovery of an undated register of members: the latter has not been disclosed by Mr Khan whose explanation for not disclosing it was not satisfactory.

I should record that Dr Basha and Dr Nallamothu's disclosure largely comprises public documents filed at Companies House. There are a very small number of additional documents copies of which they say they personally retained.

Accordingly, I find that the books and records of the companies were maintained at Montrose House and that was the position when Mr Khan took control of those premises on 27 June 2005. It follows that I find that he has failed to comply with his duty of disclosure. When considering the evidence I therefore consider that I am entitled to draw adverse inferences against him as to what those documents would have shown. However, I also need to bear in mind that if Mr Khan's case concerning Dr Basha's fraudulent filings at Companies House is correct, it is possible that the underlying documents also did not reflect the reality.

Each side from time to time relied upon filings made at Companies House in support of their case. In view of the allegations and counter allegations made as to such filings, I need to be extremely cautious in relying on those filings when determining the issues I have to decide. Indeed, Mr Hussein accepted that the filings made on and after 27 June 2005 were of themselves of no evidential value at all since they were made after the current dispute had come into the open. I would go further and say this applies to filings made ,on and after 23 June 2005 in view of my findings relating to the events of late June 2005 to which I should now turn in order to clear the ground before considering the preliminary issues.

The events of late June 2005

The evidence discloses that Dr Basha and Mr Khan flew to Spain in the late afternoon of 23 June 2005 and shared a hotel room. The return flight had been booked for late evening on Friday 24 June 2005. Dr Nallamothu was in India at this time.

Mr Khan's evidence was that the trip to Almeria, Spain was Dr Basha's idea. Although the flights were paid for using Mr Khan's credit card, he says that Dr Basha made the bookings and that he gave Dr Basha his credit card details for this purpose. Mr Khan claimed that Dr Basha's stated purpose was to ask for forgiveness and resolve the matter. Mr Khan claims that he sacked Dr Basha on 1 June 2005 as a result of discovering Dr Basha's actions in "hijacking" the companies, Dr Basha slandering Mr Khan and his family and threatening to throw Mr Khan out onto the streets. Mr Khan also suggested that Dr Basha was aware of the changes that had been made electronically to the records at Companies House by or at the behest of Mr Khan on 23 June 2005 and engineered the trip so that he could claim that the changes had been made in his absence or to gain the sympathy of the court. He says that Dr Basha knew the changes had been made because the latter had voluntarily given the security codes to Mr Khan. Mr Khan denied leaving his luggage behind in Spain to give the impression that he was still there. He also denied that he stole Dr Basha's passport.

Dr Basha's evidence about the trip to Spain is contained in paragraphs 30 and 32 to 34 of his witness statement which he repeated and expanded upon when being cross examined. He says the trip to Spain was Mr Khan's idea and that Mr Khan made the bookings over the web using his credit card. Dr Basha claims that the electronic filings made at Companies House by Mr Khan on 23 June 2005 which purported to show a number of changes, including Mr Khan's appointment as director of LCBS and Carlton, were no coincidence. He says that when he awoke on the morning of24 June 2005 Mr Khan was not in the hotel room but had left his baggage behind (which he later brought back to England). Dr Basha's passport was missing. He made a large number of telephone calls on his mobile phone attempting to contact Mr Khan without success. Dr Basha was unable to return to England until 29 June 2005 having obtained a replacement passport.

There seems to be no dispute that on or about Monday 27 June 2005, following his return from Spain, Mr Kahn attempted to gain control of the Montrose House and Trocoll House premises relying on the filings which he had made at Companies House on 23 June 2005 purporting to show that he was the director of LCBS and CPS. He was denied access to the Trocoll House premises by the landlords but he was able to enter Montrose House.

It is common ground that when Mr Khan entered Montrose House on 27 June 2005 he handed a letter to Mr Shukur bearing that date purporting to terminate his employment. The police were called and Mr Shukur left the premises once they arrived. Mr Khan has been in control of Montrose House ever since. I find that Mr Shukur was totally taken by surprise by Mr Khan's actions on 27 June 2005.

Other than the allegation that Mr Khan stole his passport (as to which I make no findings), I accept the evidence of Dr Basha as summarised above. I find that the evidence given by Mr Khan as to the trip to Spain was a torrent of lies. I consider that it was no coincidence that the trip to Spain occurred on the same day as the electronic filings made by or at the behest of Mr Khan on 23 June 2005. I find that Mr Khan arranged for this trip to take place to lure Dr Basha 'out of the country so that he could return ahead of Dr Basha to attempt to take control of the companies' premises.

I reject Mr Khan's evidence that Dr Basha had, before the trip to Spain, voluntarily given him the security codes to make use of the electronic filing facility at Companies House. The way he gave evidence on this issue was neither convincing nor plausible. To my mind, it is improbable that, in view of the alleged breakdown of relations on Mr Khan's own case at the beginning of June, Dr Basha would have volunteered the codes.

Mr Khan's account of the events in June 2005 is rendered all the more implausible by his explanation of how Dr Basha came to be in possession of Mr Khan's bag which contained gifts (dolls), Mr Khan's laundry and travelling accessories (shaving kit etc). Mr Khan claimed that he did not leave his ·luggage behind ,and that Dr Basha had purloined the bag, which Mr Khan had previously left at Trocoll House, and filled it with items to support his case. I reject Mr Khan's evidence and accept Dr Basha's evidence that Mr Khan left his luggage in Spain which he later brought back with him.

I also find that Mr Khan's assertions as to Dr Basha's purposes in organising the trip are utterly implausible and I reject them.

I find that the trip to Spain was engineered by Mr Khan, that he organised and paid for the trip using his credit card, that he deliberately left his bag in the hotel room which he was sharing with Dr Basha to give the impression that he had not left and that he sought to take advantage of Dr Basha' s absence from England to take control of the companies. I find that there was no confrontation between Mr Khan and Dr Basha before that trip. I find that the letter dated 1 June 2005 by which Mr Khan purported to terminate Dr Basha's services is a fiction: its terms are totally inconsistent with the evidence given by Mr Khan.

I should nevertheless stress that, other than issues as to credibility, my findings regarding the trip to Spain have a limited bearing on the issues I have to decide. For if Mr Khan's case as to the earlier shareholders and officers of the companies is correct, in June and July 2005 he was only-seeking to regain the control to which he says he was entitled, however reprehensible the means may have been.

Findings on the preliminary issues

I now make mind findings on the rival contentions as regards the issues I have to decide. I deal with each of the three companies in turn. The most important findings concern the shareholdings in the companies. It is the shareholders of the companies who have the principal authority and power to hire and fire directors. Under the articles of association of the three companies, the existing directors also have power to appoint additional directors. They also have the power to appoint and remove the company secretary.

Thus, having made findings about who the shareholders were and are, I consider who were and are the officers of the companies.

LCBS

Shareholding

The first issue I have to resolve is Mr Khan's assertion that he was allotted 999 shares in LCBS in January 2004. In support of this assertion, Mr Khan relies on a share certificate signed by himself as both director and secretary and "extracts" of minutes of a board meeting signed by himself as director both dated 22 January 2004. Mr Khan has also produced "extracts" of minutes of an extraordinary general meeting signed by himself dated 16 January 2004, although little reliance was placed by Mr Hussein on this document in support of Mr Khan's case.

The authenticity of these documents been challenged I find that challenge is successful and that these documents have been recently manufactured by Mr Khan to support his case. My reasons are as follows:

(i) Mr Khan gave evidence that copies of these documents (in particular those dated 22 January 2004) were III the folder of documents which he gave to his then solicitors on 1 or 2 August 2005. However, in a witness statement dated 15 August 2005, Mr Way, his then solicitor, having referred to the provision of documentation to him by Mr Khan on 2 and 3 August said (at para 7):

"Unfortunately it became apparent that the documentation provided by Mr Khan did not include evidence as to Mr Khan's shareholdings in any of the [companies] and clearly only a "member" of a company can issue a section 459 petition ... "

(see also para 8 which makes mention of certain evidence of Mr Khan's shareholding in LCBS but conspicuously does not refer to the share certificate or "extracts" of minutes).

Mr Khan blames Mr Way and says that he was mistaken. However, it is clear to me that Mr Way would not have signed a witness statement in this form if he had had the share certificate and the "extracts" of minutes in his possession, documents which would clearly have been appreciated to have had a significant bearing on Mr Khan's case. Mr Khan also accepts that he read the witness statement but did not point out the "mistake" to Mr Way.

(ii) When asked how the share certificate came into his possession, Mr Khan asserted that it had been given to him in January 2004 by Dr Basha. However, in the Points of Claim, which included a statement of truth signed by Mr Khan on 15 August 2005, the following is pleaded at para 5 in relation to the alleged allotment of 999 shares on 22 January 2004:

Mr Ahmed informed the Petitioner that all necessary documents to effect the allotment and registration of those shares would be forwarded to him by post. However, nothing was ever received. (My emphasis)

I also find it highly improbable that, had the documents in question been available, they would not have been alluded to in the pleading. Mr Khan sought to blame counsel (not Mr Hussein) who had drafted the pleading. The more likely explanation is that, not only were the documents in question not then available, but the pleader was seeking on Mr Khan's instructions to explain the lack of documentation.

(iii) Razwan Ahmed and Mohammad Farooque Khan gave evidence of a meeting with Mr Khan in a restaurant at lunchtime on 12 August 2005. They said that Mr Khan produced a number of documents which he asked Razwan Ahmed to sign or to procure the signature of others. The documents comprised two draft affidavits (one for Razwan Ahmed and one for Sofia Bono - Razwan Ahmed's mother in law) and, more significantly, three unsigned board resolutions of LCBS. The latter included an unsigned resolution of the directors of LCBS allotting 999 ,shares to Mr Khan, Mr Khan denied that he produced these documents. I accept the evidence of Razwan Ahmed and Mohammad Farooque Khan. This episode shows that Mr Khan was seeking on 12 August 2005 to manufacture documentation to support his case.

(iv) In his witness statement Mr Khan asserts that Razwan Ahmed failed to attend an extraordinary general meeting of LCBS, which had been called to allot Mr Khan 999 shares, despite being sent two notices. In cross examination, Mr Khan confirmed that Razwan Ahmed did not respond to the notices. It is important to note that on Mr Khan's own case the only shareholder in LCBS prior to the alleged allotment was Razwan Ali. In paragraph 6 of his witness statement, Mr Khan states that the board allotted him 999 shares on 22 January 2004. By contrast the "extracts" of the minutes of the extraordinary general meeting of LCBS held on 16 January 2004 signed by Mr Khan and produced by him at the trial purports to suggest that the allotment was approved at that meeting (Mr Khan having been appointed chairman). These inconsistencies suggest that these "extracts" have been manufactured by Mr Khan.

(v) It is also to be noted that Mr Khan has only produced "extracts" of the minutes of meetings, not the minutes themselves, even though he accepted that there had been a full set of the companies' records. Mr Khan claimed that he signed the extracts at the request of Dr Basha who, he said, was in charge of the formalities. I reject Mr Khan's evidence in this regard.

To support his claim that he paid £999 in cash in respect of the allotment, Mr Khan relied on bank statements of LCBS' account at HSBC which shows certain credits to the account in January 2004 in excess of £1,000. In opening the case on behalf of Mr Khan, Mr Hussein pointed to credits of £500, £ 100, £100 and £400 made on 19 January 2004 as supporting Mr Khan's claim. During cross examination, after it was suggested that these credits did not support Mr Khan's case that he paid £999, Mr Khan changed his case and he relied on a credit of £1290 made on 22 January 2004. None of these credits support Mr Khan's case that he made a payment of £999 to LCBS in respect of the allotment. The way his case changed also suggests that Mr Khan was quite prepared to tailor his evidence in whatever way he thought best suited his case.

When asked whether there were any of his personal bank statements showing a withdrawal of £999, Mr Khan suggested that his credit card statements should show this. He said that he would have to look at his credit card statements and said he had "no idea" that he needed these. The implausibility of this evidence is demonstrated by the fact that Mr Khan had produced credit card statements to show much smaller payments made regarding the acquisition of LCBS and Carlton in 2003. He also produced credit card statements for January 2004: none show a withdrawal of £999 or like amount.

Mr Khan also sought to rely on the evidence of Mr Choudhary. The oral evidence of Mr Choudhary was not consistent with his witness statement. He gave evidence that there was a meeting held in January 2004 at which a number of persons were present, including himself, Mr Khan and Dr Basha. He described others as being present including a number of teachers. At the meeting he said there was discussion about a presentation that was to be made for Grenada University. He said he could not remember anything specific about the meeting but recalled a discussion about several companies - he said he was aware the discussion related to Carlton and LCBS although initially when giving evidence he said the discussion was about Carlton. Although Mr Choudhary mentioned 999 shares in his witness statement, his oral evidence was not consistent - he referred to 99 shares and then said the discussion was about 99% of the shares. In the event, I find that Mr Choudhary's evidence was far too vague to support Mr Khan's case and his description of the meeting did not suggest to me that it was the board meeting on which Mr Khan sought to rely.

For these reasons, I reject Mr Khan's case on the facts and find that there was no allotment to him of 999 shares in LCBS. Even if I had accepted his version of the facts there would have been no allotment effective in law. By s 80 of the Companies Act 1985, the directors are only empowered to allot shares if authorised to do so by the company in general meeting or the company's articles. LCBS's articles do not confer such authority on the directors. On Mr Khan's own case, Razwan Ahmed as the sole shareholder did not attend the general meeting of the company at which it was proposed the allotment be authorised. Accordingly the directors had no power to allot Mr Khan the 999 shares.

Having rejected Mr Khan's case as to the allotment to him of 999 shares in LCBS, it follows that he was never a shareholder in LCBS.

Dr Nallamothu claims that Razwan Ali transferred his share in LCBS to Mr Bathulla on 1 August 2004 as Dr Nallamothu's nominee and that Mr Bathulla transferred his share to Dr Nallamothu on 1 September 2004. Dr Nallamothu claims he still holds that share. These claims are challenged by Mr Khan.

I describe the circumstances in which these transfers are said to have occurred below when considering the directors of LCBS. As regards the share in LCBS originally held by Razwan Ahmed, I accept the claims made by Dr Nallamothu. His evidence was supported by that given by Razwan Ahmed. Dr Nallamothu's case is also supported by a number of documents. The directors' report attached to the unaudited accounts for LCBS for the year to 31 August 2004 signed by Mr Bathulla (apparently on 15 September 2004 though not filed at Companies House until early June 2005) shows Mr Bathulla holding one share as at 31 August 2004. Mr Khan accepted that the signature was that of Mr Bathulla. There is also an annual return for the year to 12 August 2004 apparently signed by Nurgul Koca (the company secretary) on 29 December 2004 and filed at Companies House on 8 January 2005 which shows Mr Bathulla as the sole shareholder in LCBS as at 12 August 2004.

As regards the transfer of the share from Mr Bathulla to Dr Nallamothu, I was shown a copy of a stock transfer form, signed by Mr Bathulla, showing the transfer of one share in LCBS from Mr Bathulla to Dr Nallamothu. The form is dated 1 September 2004: although it was suggested by Mr Khan that the form was backdated there was no evidence to support this suggestion. Mr Khan accepted that the signature on the form was that of Mr Bathulla. Dr Nallamothu explained that Mr Bathulla gave him a copy of the stock transfer form in October 2004 and says he saw the original which was retained at Montrose House.

Dr Nallamothu also claims that he was allotted 99 shares in LCBS on 13 August 2004. Whether or not this allotment occurred, it follows from my previous findings that Dr Nallamothu is the sole shareholder in LCBS. Although there is little documentation to support Dr Nallamothu's case as regards the 99 shares (for reasons which I have previously described), the unaudited accounts for LCBS for the year ended 31 August 2004 show, in the balance sheet (signed by Mr Bathulla, although curiously said to have been approved by the board on 15 October 2004 cf the directors' report referred to above), called up share capital of £100. I attach little weight to the return of allotment filed at Companies House on 14 July 2005 after the current dispute erupted. This return was filled in by Mr Shukur who accepted that he filled this in on the basis of his previous examination of the records of LCBS and did not have them available at the time he filled in the return. Dr Nallamothu claims that he gave £100 in cash to Mr Bathulla in October 2004 (he was abroad in August 2004) in respect of the allotment and had previously sent a proxy to Mr Bathulla as his nominee to .authorise the allotment. Although the evidence is incomplete in that relevant supporting documentation is not available, I accept Dr Nallamothu's assertion that he was allotted 99 shares in LCBS on 13 August 2004.

Directors

The first issue I have to decide is whether Mr Khan resigned on 2 August 2004. A document was produced at trial bearing Mr Khan's signature headed "To whom it may concern" and referring to Mr Khan as director of LCBS. It

. "[I] Declare that 1 am resigning for personal reasons from the position of being a Director of [LCBS] and confirm that I have got no any [sic] relationship with [LCBS] in whatever manner from this date the 2^nd August 2004. Duly signed on this day the 2^nd August 2004."

Mr Khan originally claimed (in his Points of Claim para 11) that the document was not signed by him or, if it was so signed, was not signed knowingly. In the light of the expert handwriting reports, Mr Khan accepted that it was his signature but claims that he was tricked into signing the document by Dr Basha, believing that it related to his resignation as company secretary of LCBS.

It is necessary to set out the background in a little more detail. The evidence of Razwan Ahmed was that Mr Khan as director had been running the business of LCBS from about mid December 2003. In the late spring! early summer of 2004, Razwan Ahmed said that he became dissatisfied with the performance of Mr Khan in that the business appeared to be loss making and about £25,000 which he (Razwan Ahmed) had provided by way of funding had been used up with no apparent prospect of being repaid. Razwan Ahmed said that he was particularly concerned at how some £70,000 which had been standing to the credit of LCBS' bank account at about the time he ceased to be a director in December 2003 had been used up. He said that he was concerned about the future of the company and the students many of whom had enrolled through his friends. He had been introduced to Dr Nallamothu in April 2004. Dr Nallamothu had referred a number of students to LCBS and had shown an interest in the business. Razwan Ahmed says that he approached Dr Nallamothu in July 2004 with a view to the latter acquiring his shareholding in LCBS. Dr Nallamothu agreed but had to return to India before the formalities could be completed - hence the involvement of Mr Bathulla acting effectively as Dr Nallamothu's nominee. Mr Bathulla was described by Dr Nallamothu as an IT man with management skills whom he had known for some years (as well as Mr Bathulla's father).

The evidence given by Dr Nallamothu corroborates much of what was said by Razwan Ahmed. Dr Nallamothu says that he agreed to become shareholder because he could see the potential for the business in view of the number of students at LCBS. His evidence was that the share was transferred on 1^st August 2004 to Mr Bathulla who was also appointed as a director on the same date.

Razwan Ahmed gave evidence about a meeting on 2 August 2004 at which

The allegation that Mr Khan resigned as a director in August 2004 is supported by the director's report to the unaudited accounts for LCBS for the year ended 31 August 2004 signed by Mr Bathulla.

Mr Khan challenges this version of events. He accepts that he resigned as company secretary at the beginning of August 2004 and that he spent less time with the business in August 2004 because his family from Pakistan were visiting England. However, he denies that he resigned as a director and claims to have carried on his functions as before. In this regard, he relies on a number of documents (disclosed by him late) which he says shows his continued involvement in the business of LCBS as director.

It is common ground that Mr Khan continued to have a role in the business of LCBS. Dr Nallamothu said that, notwithstanding the dissatisfaction expressed by Razwan Ahmed over Mr Khan's performance, he was grateful for Mr Khan's continued assistance. Dr Basha described Mr Khan as a "frequent visitor" to Montrose H04se.Mr-Khan claims that he was paid a salary after-August 2004 (although this was denied by Dr Basha). If he was paid, it is perhaps not surprising that he provided some assistance whether or not he was still a director.

The documents disclosed by Mr Khan show that he signed cheques on behalf of LCBS which post dated his alleged resignation as a director. Of those disclosed, most appear not to have been completed by him. Dr Basha gave evidence that Mr Khan continued to be the signatory on LCBS's bank account until the mandate was changed in March 2005 following Mr Bathulla's resignation as a director when, apparently with Mr Khan's consent, Dr Basha became a signatory. Dr Basha said that there was a problem with Mr Bathulla becoming a signatory because of his inability to provide proof of his residence (even though he apparently had a work permit and was employed by Carlton). Dr Basha said that, when Mr Khan ceased to be a director, Mr Khan signed a number of cheques in blank. Mr Khan accepted that he did on occasion sign cheques in blank but not to the extent suggested by Dr Basha. Dr Basha said that the cheques were completed by himself or another member of staff. There is however one cheque dated 10 February 2005, representing payment by LCBS of rental to the landlord of CPS, which was completed and signed by Mr Khan. Mr Khan also completed a bank priority payment form in October 2004. Mr Khan points in addition to the continued use of a company credit card in his name: Mr Shukur's evidence was that the relevant entries relied on by Mr Khan represented use of the card not by Mr Khan but another member of LCBS's staff to acquire goods over the web for which no signature was required. I bear in mind other documents signed by Mr Khan after 2 August 2004 such as an agreement with the Cyprus Institute of Marketing dated 23 August 2004 and an application form for telecom services signed on 20 August 2004. There is also an insurance policy bearing Mr Khan's name for all three companies which was issued on 4 October 2004, although its effective date was 17 May 2004 when Mr Khan was still a director. I consider that incoming documents addressed to Mr Khan as director after 2 August 2004 are of less significance since in many cases these seem to me merely to reflect the records maintained by the sender before 2 August 2004 recording Mr Khan as a director.

Whilst these documents are generally supportive of Mr Khan's case that he continued to be a director, they are by no means conclusive. I must nevertheless take them into account when considering the evidence as a whole.

In support of his assertion that he was tricked into signing the document by Dr Basha, Mr Khan relies on the evidence of Younas Ali. The evidence of Younas Ali was to the effect that in August 2004, in the presence of himself and Dr Nallamothu, Dr Basha stated that LCBS should rightly be his and expressed the desire to get rid of Mr Khan. Younas Ali says that Dr Basha suggested that he would transfer the company into the names of Dr Nallamothu and himself and that he could place a letter of resignation as a director amongst other documents to be signed by Mr Khan so that Mr Khan would not notice what he was signing. Younas Ali says that Dr Basha tried to enlist his help for the purpose of the latter. I have already made general comments on the unreliability of the evidence of Younas Ali. When giving oral evidence, Younas Ali said that he was "100% sure" the meeting took place in August. However, Dr Nal1amothuclaims that he was not in England in August 2004:this is confirmed by his passport entries. I prefer the evidence of Dr Nallamothu and do not consider that he would have been a party to the wrongdoing as suggested by Younas Ali. I am also satisfied that Dr Basha had no involvement in procuring Mr Khan's letter of resignation. Dr Basha's evidence, and that of Razwan Ahmed, was, as I find, that Dr Basha was not present at the meeting of 2 August 2004 when the letter of resignation was produced.

It was also suggested by Mr Khan that the electronic filing at Companies House showing Mr Khan's resignation as a director of LCBS (as well as the filings of all other appointments and resignations relating to all three companies which are disputed by Mr Khan) show on their face that the filings were improper and that these were made by Dr Basha to hijack the companies. The alleged impropriety is said to be apparent from the fact that the filings were made at Companies House days and sometimes weeks after the appointment or resignation in question. Thus, in the case of the electronic filing of Mr Khan's resignation as a director of LCBS, it was filed on 27 August 2004 and apparently authorised by a director on that date, yet purported to show the date of resignation as 2 August 2004. By comparison, other appointments and resignations were filed electronically on the same date as the relevant date: thus Zainullah Mohammad's resignation as a director of LCBS was filed on 3 August 2004, the same date as the date of resignation, and Mr Khan's resignation as company secretary was filed on 2 August 2004, also the same date as the date of resignation. In closing Mr Khan's case, Mr Hussein went so far as to suggest that all electronic filings which were made on the same date as the appointment or removal were authorised by Mr Khan whereas all those that were filed on a later date were made without his authority.

The dates of filing do appear to be an oddity but I am of the view that it would be wrong to conclude that this is evidence of impropriety. There are a number of reasons for my taking this view. Firstly, the filings for a number of appointments and resignations of officers of the three companies which are not challenged by Mr Khan share a similar characteristic of being filed late. On his own case, there must be an innocent explanation for the late filings of these and I do not see why there may not be similar innocent explanations for the late filings of appointments and resignations which are challenged by Mr Khan. 'Secondly, the filings in question, though late, are only late by a matter of days in some cases and in others at most by a few weeks. Thirdly, if Dr Basha were acting in the manner suggested by Mr Khan, there is no particular reason for Dr Basha to have delayed the filings and there was no evidence adduced to explain why it would have been necessary for Dr Basha to have made the filings late in order for him to have succeeded in achieving his alleged goal. Fourthly, at least one appointment which is challenged by Mr Khan (namely of Dr Basha as company secretary of LCBS) was filed on the same date as the appointment. I would also point out that filings relied on by Mr Khan in support of his case, which I consider below, were made late.

Taking into account all the evidence I have heard, I find that Mr Khan resigned as a director of LCBS on 2 August 2004. I accept the evidence of Razwan Ahmed and Dr Nallamothu which I have summarised above. I reject Mr Khan's assertion that he was tricked by Dr Basha into signing his resignation .. letter and find that he knowingly signed the letter. I also reject Mr Khan's case that Dr Basha sought to hijack LCBS. Whilst I am not wholly satisfied about the evidence I have heard as to Mr Khan's continuing role at LCBS, 1 am far from satisfied that such continuing role establishes that he continued as a director.

As regards the appointments of director which were challenged by Mr Khan, I find that Mr Bathulla was appointed a director on 1 August 2004 and resigned on 31 March 2005. Mr Bathulla's appointment is confirmed by the evidence of Dr Nallamothu and Razwan Ali and also by the unaudited accounts for LCBS for the year ended 31 August 2004 (which show Mr Bathulla as director - as well as recording Mr Khan's resignation). Dr Nallamothu gave evidence of Mr Bathulla's resignation which I accept.

Dr Nallamothu also gave evidence, which I accept, that he was appointed a director on 1 April 2005.

Further, I accept Dr Nallamothu's evidence that the documents which record the formalities of the appointments and resignation referred to in the previous two paragraphs did exist and were retained at Montrose House.

It follows from the above that I find that the electronic filing at Companies House made by or on behalf of Mr Khan on 23 June 2005 purporting to show his appointment as a director on 1 June 2005 does not reflect reality. No such appointment was made.

Company secretary

On Mr Khan's case, there was no company secretary following Nurgul Koca's resignation on 28 February 2005 (which is admitted) until Shafique Ahmed was appointed on 1 June 2005. The only evidence to support the latter is the electronic filing made by or at the behest of Mr Khan on 23 June 2005. I find there was no such appointment.

Dr Nallamothu and Dr Basha assert that the latter was appointed company secretary on 1 March 2005 (and supported by an electronic filing on that date). I accept their assertion even though there is no documentation available (other than the electronic filing) to support it.

CPS

Shareholding

The issue of what became of the shares in CPS held by Younas Ali is particularly difficult to resolve. There is a direct conflict of oral evidence but little documentation available which is of any assistance. Younas Ali, the original owner, did not give evidence. He is believed to be in Paris but none of the relevant witnesses knew of his address.

Mr Khan says that Younas Ali transferred the shares to him in April or May 2004 for £2000. He claims to have paid for the shares in cash, but he was unable to provide any bank statements or credit card statements to corroborate this (whereas he was able to provide statements to support his assertion that he had previously paid far smaller sums to acquire LCBS and Carlton). It is to be noted that CPS was only incorporated on 16 March 2004. There was little evidence before me to suggest that it started operations much before August 2004 when the premises at Trocoll House were acquired. It is also to be noted that on Mr Khan's own case Younas Ali did not resign as a director until I August 2004.

On this issue, Mr Khan was supported by the evidence given by Muzzafar Suhail. His oral evidence was to the effect that he attended a meeting at Trocoll House with Mr Khan, Dr Basha and Younas Ali also present. He says he was present because Younas Ali wanted to sell his business and wanted him there in case he needed to sign any documentation as a director of the business. In fact his signature was not needed. Initially, Muzzafar Suhail said he thought the meeting was in the first week of May - he said he definitely remembered the month and was "quite positive" about that. When he was shown entries on the passport which he had produced indicating that he was in Pakistan between 16 April 2004 and 12 June 2004 he said that the meeting would have been in the first week of April 2004.

Dr Basha's evidence was that the shares were transferred to him by Younas Ali on 1 August 2004. He says that the shares were given to him by Younas Ali as a friend at a time when Younas Ali wanted to go back to France. Dr Basha says that there was a meeting in August 2004 when Younas Ali executed a stock transfer form. He claims that the form was filed with the Inland Revenue in October 2004 by Nurgul Koca on his instructions and stamped. Dr Basha says that he made inquiries of the Inland Revenue but was told they do not keep a copy of the transfer form. Meanwhile Nurgul Koca is in Belgium and he does not have her current address. Dr Basha denied that he attended the meeting described by Muzzafar Suhail (and said that he had never met Muzzafar Suhail - the director).

Dr Basha's case in this regard is supported by the evidence given by Mr Shukur. Mr Shukur says that shortly after coming to England in March 2005 he filled in an annual return for CPS which had previously been sent for completion by Companies House. The completed annual return is stated to have been made up to 16 March 2005 (one year after the incorporation of CPS). The information filled in by Mr Shukur shows that the issued share capital of CPS was £1000 comprising 1000 shares and that Dr Basha is the holder of these shares. Mr Shukur stated that he filled in these details by reference to a completed stock transfer form and a minute book which were amongst the records of CPS at Montrose House. Whilst he said that he filled in the form at the request of Dr Basha, Dr Basha was not present when he filled in the details: these he obtained from the records as he described.

There are shortcomings in the annual return. The columns in the forn1 for details of the transfer of shares (including the date of registration of the transfer) have been left blank - Mr Shukur said it was his mistake not to provide the details. The return is signed by Dr Basha and dated 16 March 2005 even though, on his own case, he was not an officer of CPS at that time. However, the annual return was filed at Companies House on 4 May 2005 at a time when, even according to Mr Khan, relations between himself and Dr Basha were still reasonably good.

I have not found it easy to resolve the conflicting evidence. Dr Basha's account carries with it the inherent implausibility of him having been gifted the shares even though Younas Ali ostensibly had paid £1000 for them in March 2004. Dr Basha's evidence before me (which reflects paragraph 18 of his witness statement dated 2 September 2005) is not wholly consistent with Paragraph 30 of the Points of Defence or paragraph 13 of his witness statement dated 26 July 2004 (although Dr Basha was not cross examined on this by Mr Hussein). Mr Hussein sought to suggest that it was no coincidence that August 2004 was the month when Dr Basha or his associates sought to gain control of all three companies (I refer to the evidence about Carlton later in this judgment). On the other hand, I bear in mind my findings in relation to LCBS which absolve Dr Basha of wrongdoing in relation to that company. I also bear in mind that even on Mr Khan's own case, Younas Ali resigned as a director of CPS on. 1 Augl.lst2004. That fact, it seems to me, is more consistent with the case put forward by Dr Basha that it was in August 2004 that Younas Ali severed his ties with CPS.

Having carefully considered the evidence, I prefer that given by Dr Basha and Mr Shukur. In forming this view, I take into account my findings as to what has become of the books and records of CPS. I think it likely that the books and records would have supported the case of Dr Basha and that these have been suppressed by Mr Khan. Such documents as have been produced by Mr Khan relating to CPS do not provide any material support to his case and do not record any significant involvement by Mr Khan in the affairs of CPS. Accordingly, as between the individual parties to these proceedings I resolve the issue in favour of Dr Basha and find that the shares formerly held by Younas Ali were transferred to him on 1 August 2004.

I have resolved this issue because I was urged to make a finding one way or the other by the parties appearing before me on the basis of the evidence I have heard and there was no request for an adjournment to find Younas Ali. However, during the course of closing submissions, I expressed concern that, having not heard from Younas Ali, it was conceivable that he might wish to maintain that there had been no effective transfer and that he still had an interest in the shares of CPS. I indicated that I was not therefore prepared to make a declaration or similar order reflecting my findings unless Younas Ali had been given the opportunity to be heard. I shall hear further submissions as to the appropriate course to be followed after this judgment has been delivered. I should however make it clear that my findings are binding as between the individual parties who appeared before me. The only purpose of postponing the making of an order is to give Younas Ali the opportunity to claim that he still has an interest in the shares before I make an order which would effectively preclude him from making such a claim.

Directors

On Mr Khan's case there were no directors of CPS following Muzzafar Suhail's resignation on 31 March 2005 until the purported appointment of himself and Shafique Ahmad on 1 June 2005. As regards the latter, Mr Khan relies on the electronic return filed on his instructions on 23 June 2005 immediately prior to the trip to Spain. I find that there was no such appointment.

Dr Basha claims that Dr Nallamothu was appointed director of CPS on 1 April 2005 following Muzzafar Suhail's resignation on 31 March 2005. Dr Nallamothu gave evidence to support this claim. In view of my findings as to the shareholdings in CPS, Dr Basha as sole shareholder had power and authority to make such appointment. On the evidence that I have heard, I find that such appointment was effectively made and that Dr Nallamothu remains the sole director.

Company secretary

For similar reasons I reject the claim by Mr Khan that he was appointed company secretary of CPS on 1 June 2005 and find, on the evidence I have heard, that Dr Basha was appointed company secretary on 1 April 2005 and remains as such.

Carlton

Shareholding

It is common ground that when Carlton was acquired from formation agents in October 2003 Dr Basha received one share. Dr Basha maintained that this was the only share in Carlton which was issued. However, he always faced the difficulty that it was clear from the incorporation documents that two shares of £1 each had been issued on incorporation, one to each of the formation agent companies.

Bearing in mind the evidence as to the business of Carlton, the fact that Mr Khan was described as an IT consultant and that Dr Basha accepted that both he and Mr Khan were initially appointed directors of Carlton following its acquisition, it seemed to me inherently likely that the second share had been transferred by the formation agent (lst Cert Formations Ltd) to Mr Khan at the time Carlton was acquired. After he had given evidence at trial, Mr Khan got In touch with the formation agents (Mr Foster of the BCR Group) who eventually provided information (recorded in an attendance note dated 22 September 2005 prepared by Dr Basha's solicitor) which satisfied me that this was indeed the case. The information provided by Mr Foster was that, the details retained electronically by the BCR Group showed that a stock transfer form showing a transfer of one share in Carlton to Mr Khan had been completed in October 2003.

ill the light of this information it is not necessary for me to dwell on the other evidence which has been adduced in relation to the original shareholding in Carlton. I find that Dr Basha and Mr Khan each held one £ 1 share in Carlton as from 6 October 2003 and continue to hold such shares.

It was suggested to Dr Basha that he had deliberately suppressed information relating to Mr Khan's share in Carlton. I do not consider that this was so. It appears that others were also confused about the initial shareholding. ill Carlton's unaudited accounts for the year ended 31 December 2003, which were signed by Mr Khan on 22 January 2004 and attached a report from John Rich & Co, certified accountants, bearing the same date, the called up share capital is shown as only £1. Not only is this incorrect, but so is the director's report (signed by Mr Khan) which, contrary to his case at trial, states that he was the sole director during the period under review and that he was the sole shareholder.

Mr Khan asserts that an additional 800 shares were allotted to him on 1 June 2005. He relies on an electronic filing at Companies House made by him or on his behalf on 5 July 2005 and says that Dr Basha agreed to the allotment. I have no hesitation in rejecting these allegations. There is no corroborating evidence that such allotment was authorised by the company in general meeting or by the directors. I find it inconceivable that Dr Basha would have agreed to the allotment. I find that there was no such allotment.

Directors

The principal issue as regards the directors of Carlton is whether Mr Khan resigned on 1^st August 2004 as is alleged by Dr Basha. I say principal issue because, in the light of my other findings, this will determine who now has effective control of Carlton.

Dr Basha gave evidence of a meeting with Mr Khan in August 2004 at which Mr Khan resigned as a director of Carlton. Dr Basha claimed that Mr Khan signed a letter of resignation and that there would be records at Montrose House which confirm that Mr Khan resigned. He says that Mr Khan resigned so that he could concentrate more on his family. When cross examined about the reference to the "termination" of Mr Khan's directorship in paragraph 25 of his witness statement, Dr Basha said that he was intending to refer to Mr Khan's resignation: this is supported by his reference in paragraph 62 to Mr Khan having resigned from Carlton.

There are only two documents available on which Dr Basha relies. The first is an electronic filing at Companies House made on 14 September 2004 purporting to show the date of Mr Khan's resignation on 1 August 2004. He says this was filed by Nurgul Koca on his instructions and authority. For reasons I have already given, I attach little weight to this document.

The second document is an annual return for Carlton made up to 30 December 2004 filed at Companies House on 28 January 2005. It appears to have been prepared by Nurgul Koca and signed by Dr Basha on 25 January 2005. Dr Basha was cross examined by Mr Hussein as to why the document showed a change to the registered office from Trocall House to his home address, an address which was also that given for Nurgul Koca. Dr Basha's explanation was far from convincing. In the light of my findings as to the shareholders of Carlton, the return is defective in that it shows Dr Basha as the· sole shareholder. For present purposes, the relevance of the annual return is that it shows Dr Basha as the sole director. However, it would appear that this information was filled in by Companies House based on the electronic filings it had received. For all these reasons I also attach little weight to this document.

On the other hand, Mr Hussein was only able to point to one document which showed Mr Khan's continued involvement in Carlton. It is a letter dated 19 August 2004 from British Telecom addressed to Mr Khan referring to a cancellation of transfer of calls. This document is inconclusive in pointing to Mr Khan's continuing involvement as a director.

Mr Hussein again pointed to the coincidence of the 1^st August date. The retort of Mr Watson-Gandy (who appeared for the Respondents) was that if! were to find against Mr Khan as regards LCBS it would make some sense that he also resigned his directorship with Carlton, particularly as the letter of resignation signed by Mr Khan regarding his directorship of LCBS referred to his resignation "for personal reasons". However I need to bear in mind that the circumstances of Mr Khan's resignation as a director of LCBS were not the same for Carlton.

In his pleaded case (para 36 of the Points of Claim), Mr Khan claims that he "is the truly appointed sole director and a Mr Younas Ali the Company Secretary by virtue of appointments on 1 June 2005 .. " This is a curious plea if Mr Khan had been a director since October 2003. The appointment of Mr Khan there referred to is reflected in an electronic filing made by or on behalf of Mr Khan on 27 June 2005. I have no hesitation in rejecting such alleged appointment. Mr Khan's witness statement is also curiously silent about his position as a director of Carlton. However, I think it would be wrong to attach too much significance to these curiosities.

In resolving this issue I am therefore faced with a direct conflict of evidence between Dr Basha and Mr Khan. No other witnesses provided corroborating evidence and I do not consider that I can attach much weight to the documents relied upon by each individual. Despite my doubts as to the evidence of Dr Basha on this issue, I prefer his evidence to that of Mr Khan. In general, I consider that the evidence he gave was more reliable than that of Mr Khan, the shortcomings in whose evidence I have described earlier in this judgment. I find that Mr Khan did resign as a director of Carlton on I August 2004.

Whether Ms Parvez Runjanally was a director between 30 July 2004 and 30 September 2004 appears to be of historic interest only and this issue was not explored in any detail in cross examination. I accept Dr Basha's evidence that she was a director of Carlton in this period.

Mr Khan claims that Dr Basha resigned as a director of Carlton on 1 June 2005 and relies on the electronic filing made by him (Mr Khan) or at his request on 23 June 2005. I have no hesitation in rejecting such claim.

Company secretary

It follows from my earlier findings that Dr Basha as director of Carlton had the power to appoint and remove the company secretary. Dr Nallamothu and Dr Basha say that Younas Ali resigned on 5 July 2005. I find that Younas Ali's appointment as company secretary was terminated on that day by Dr Basha as director (as reflected in the minutes of the inaptly described shareholders meeting of Carlton on that day at which Dr Basha and Dr Basha's solicitor was present). Dr Basha says that Dr Nallamothu was appointed company secretary on 1 June 2005 and remains as such. I find that such appointment was made but only on 5 July 2005 (as recorded in the same minutes). The date I June 2005 appears from (non-electronic) filings at Companies House of Dr Nallamothu's appointment made on 11 July 2005 and signed by Dr Basha and Dr Nallamothu on 5 July 2005. However, I think the date I June 2005 was inserted in an attempt to "undo" various electronic filings which had been made by or on behalf of Mr Khan in late June purporting to show various appointments and removals of officers as at 1 June 2005 which, as I have found, did not reflect the reality. I consider that the minutes I have referred to reflect the true position and I accordingly find that Dr Nallamothu was appointed company secretary on 5 July 2005.

I shall hear Counsel as to the appropriate form of the orders which I should make in the light of my findings.

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