Bhavin Rashmi Mehta v Chetan Mehta and others

Arpee Gem Pte Ltd was incorporated by two fathers, Mr Rashmi Mehta and Mr Prabodh Mehta, whose families controlled it through holding companies. Its board comprised the appellant Mr Bhavin Rashmi Mehta, his cousin Mr Chetan Mehta, Mr Sanjiwan Sahni, Mr Quek Hung Guan and Mr Modi. Arpee Gem controlled subsidiaries including Kay Diamonds NV and Menamani Investment Corporation NV (MIC).

Mr Sahni sent a notice of resignation by email on 14 December 2015 and a second one by letter dated 4 December 2018. In 2020 Mr Bhavin disagreed with Mr Chetan's proposal to sell a property belonging to MIC. In September 2021 directors' resolutions were circulated appointing Mr Chetan as Arpee Gem's proxy for the subsidiaries' AGMs, and on 3 October 2021 Mr Bhavin received copies signed by Mr Chetan, Mr Sahni and Mr Quek, a majority of the board. He objected that Mr Sahni was no longer a director.

In HC/OS 1267/2021, relying on ss 399(2) and 409A of the Companies Act, Mr Bhavin alleged that the resignations had ended Mr Sahni's directorship, so his vote was invalid. The respondents said the resignations had been withdrawn by consent, pointing among other things to directors' fees paid to Mr Sahni from 2015 to 2021 and financial statements he co-signed with Mr Bhavin, and alternatively relied on estoppel by convention. The High Court Judge dismissed the application on the narrow ground that the question was for Arpee Gem, not Mr Bhavin, to raise, and refused an application to amend to rely on ss 145(4A) and (4B). Mr Bhavin appealed in Civil Appeal No 49 of 2022.

1. Whether Mr Sahni's resignations were withdrawn with Mr Bhavin's consent so that Mr Sahni remained a director.
2. Whether a director's resignation that took effect on notice can later be withdrawn by consent.
3. Whether estoppel by convention can apply outside a contractual relationship, and whether it would bind Mr Bhavin.
4. Whether the amendment to rely on ss 145(4A) and (4B) of the Companies Act should have been allowed.

The court accepted that disputes over the phone calls and meetings said to have persuaded Mr Sahni to stay would need a trial, and noted that some people said to have agreed were neither directors nor shareholders. But other evidence needed no trial. Mr Bhavin had co-signed financial statements with Mr Sahni as directors, dated 20 September 2018 and 5 July 2019, which listed the directors in office at the date of the report; his explanation for this was inconsistent. Mr Sahni had invoiced for and been paid directors' fees, with invoices addressed to Mr Bhavin and, it appeared, paid by entities he controlled, without contemporaneous objection. Mr Bhavin also co-signed an indemnity on which Mr Sahni signed as director. This showed Mr Bhavin consented to the withdrawal of each resignation.

A resignation being effective on notice did not prevent its withdrawal by consent; read properly, Glossop v Glossop [1907] 2 Ch 370 supported withdrawal with the directors' consent. The absence of further resolutions and the December 2021 resolution confirming Mr Sahni's status were neutral.

On estoppel by convention, the court reviewed Singapore and English authority and observed that whether the doctrine extends beyond contractual dealings is not settled in Singapore. Given its finding of consent, it took no position, but said that if the doctrine applied, Mr Bhavin's silence and conduct would have estopped him, with prejudice to the other directors and to Mr Sahni.

Finally, ss 145(4A) and (4B) allow a director to resign without the company's consent but do not stop the company and director agreeing to withdraw a resignation, so the proposed amendment was misplaced.

The Appellate Division dismissed the appeal on 27 April 2023, deciding it on the facts and later gave its grounds. It also discharged injunction orders granted on 27 February 2023 in HC/OA 342/2022, and ordered Mr Bhavin to pay costs of the appeal and of HC/OA 342/2022 to the first to third respondents fixed at $50,000 all in.