Case Summaries

Carlsberg Breweries A/S v CSAPL (Singapore) Holdings Pte Ltd (Case Summary)

12 March 2021

Case summary

Carlsberg Breweries A/S v CSAPL (Singapore) Holdings Pte Ltd [2021] SGHC(I) 1
Singapore International Commercial Court Suit No 5 of 2019


Decision of Jeremy Lionel Cooke IJ:

Outcome: The court refused judgment on the plaintiff’s claim for repayment of the balance of a US$40 million loan on the basis of the defendant’s alleged breach of a particular clause in a Deed of Undertaking, the rest of the action being stayed pending the determination of related matters in an arbitration.


1          The plaintiff (“Carlsberg”) and the defendant (“CSAPLH”) incorporated a joint venture vehicle, Carlsberg South Asia Pte Ltd (“CSAPL”), in 2010. Pursuant to a loan agreement, Carlsberg loaned CSAPLH US$40 million to enable the latter to acquire a 40% shareholding in CSAPL (“the Loan Agreement”).

2          CSAPLH is an entity ultimately controlled by Mr Chandra Prakash Khetan (“CPK”), a member of the Khetan family with extensive business interests. Those interests have been the subject of some dispute between CPK, CPK’s brother Rajendra Kumar Khetan (“RKK”), and their cousin Prem Prakash Khetan (“PPK”).

3          CSAPL owned 90% of the shares in Gorkha Breweries Pte Ltd (“GBPL”), a Nepali subsidiary. 9.94% of GBPL shares were registered in RKK’s name. The GBPL board comprised six directors. Carlsberg nominated four directors and CSAPLH nominated one director (“Mr Jagetia”), each through CSAPL, to the GBPL board. PPK was nominated by RKK to the GBPL board.

4          By way of a Deed of Release of 12 April 2018, Carlsberg agreed to write off the balance of moneys owing under the Loan Agreement, provided that CSAPLH complied with its obligations under the Deed of Undertaking of the same date (“the Deed of Undertaking”). CSAPLH owned, at the time the Deed of Undertaking was made, and still owns, 33% of the shares in CSAPL, while Carlsberg owns the remaining 67%. Carlsberg’s claim in this suit for repayment of the outstanding loan was based on CSAPLH’s alleged breaches of the Deed of Undertaking.

5          The court stayed all matters in this suit pending the conclusion of a related arbitration, save for CSAPLH’s alleged breaches of clause 2(c) of the Deed of Undertaking (hereafter referred to as “clause 2(c)”), which required CSAPLH to “use its best efforts to ensure that the director appointed by [RKK] to the board of directors of [GBPL] attends all meetings of the board of directors of [GBPL]”. PPK, ie, RKK’s nominated director, did not attend the GBPL board meetings on 26 February 2019, 25 March 2019, 26 April 2019 and 1 July 2019 (referred to as “the 26 February meeting”, “the 25 March meeting”, “the 26 April meeting” and “the 1 July meeting” respectively). The central issue in this suit was whether CSAPLH had complied with clause 2(c) by using its best efforts to ensure that PPK attended the meetings in question.

6          CSAPLH claimed that PPK did not attend the board meetings for the following reasons:

(a) He did not attend the 26 February meeting because he had an engagement elsewhere which he prioritised and it was not possible for him to participate by telephone or video link. It was also not appropriate for him to appoint an alternate director because there were matters which he wished to deal with at the board meeting.

(b) He did not attend the 25 March meeting because he was unwell and had to attend hospital that morning.

(c) He did not attend the 26 April and 1 July meetings because of his concerns about the management of GBPL, the unilateral decision-making of Carlsberg and/or the failure of Carlsberg’s nominated directors to address his concerns about the management of GBPL and the treatment of RKK as the minority shareholder.

7          CSAPLH argued that it had, through CPK, Mr Jagetia and Mr Surendra Silwal (“Mr Silwal”, who was the GBPL company secretary, chief financial officer and deputy managing director), done all that it could to ensure PPK’s attendance. It alleged that, on more than 18 occasions, it had sought to persuade PPK to attend the board meetings and ventilate his concerns at those meetings. However, its efforts were hindered by Carlsberg, which did not take up any of its suggestions and failed to address PPK’s concerns.

8          Carlsberg alleged that CSAPLH’s efforts to persuade PPK to attend the meetings were shams perpetrated to create a paper trail intended to show compliance with the clause 2(c) obligation, and that CPK had procured PPK’s non-attendance to increase CSAPLH’s leverage on Carlsberg. Carlsberg alternatively contended that CSAPLH did not take all steps reasonably required for it to comply with the clause 2(c) obligation.

9          It was also common ground that informal meetings amongst the GBPL directors usually took place before and even during the formal board meetings to seek “alignment” of differing views. Carlsberg and CSAPLH each argued that not enough had been done by the other to persuade PPK to attend such informal meetings or to make them a possibility.

The court’s decision

PPK’s concerns

10        PPK’s concerns were genuine, whether they were misguided or justifiable (at [31] and [35]). As a proud and successful businessman, he did not take naturally to decisions with which he disagreed (at [24] and [31]). He considered that, as a Nepali businessman with local knowledge and expertise, his views were ignored by the GBPL board. He took the view that Carlsberg, with its majority on the GBPL board, rode roughshod over his views and therefore the minority shareholder’s (ie, RKK’s) interests which he represented (at [31]).

11        PPK’s real complaint, however, was about the new marketing model that GBPL’s managing director, Mr Ajith Babu (“Mr Babu”), sought to introduce (at [32] and [65]). Mr Babu wanted to cut down on distribution costs by cutting out a number of middlemen wholesalers. PPK, as the only Nepali director on the board, vehemently disagreed (at [32]). His resentment towards the board’s majority for deciding to move ahead on the new model coloured his views about other matters (at [32] and [34]). He thus effectively vetoed any resolutions that he disagreed with by rendering board meetings inquorate through his non-attendance (at [33] and [42]). He considered himself justified in exercising such a veto in order to protect the interests of the company or the minority shareholder, RKK (at [42] and [76]).

PPK’s non-attendance at the four board meetings

12        PPK prioritised another meeting (namely, a Hari Khetan Campus meeting) over the 26 February meeting. Despite being reminded on 10 February 2019 about the 26 February meeting, he had delayed informing the GBPL board about his unavailability until 20 February 2019 (at [50]). CPK and Mr Jagetia then made multiple attempts to persuade PPK to attend the 26 February meeting and/or to send an alternate but were unsuccessful (at [49]).

13        PPK raised four concerns in an e-mail dated 24 March 2019 which was sent to CPK and the GBPL board (“the 24 March e-mail”): the delayed payment of dividends to RKK; Mr Babu’s need for a work permit as an Indian national; the absence of new Route to Market Key Performance Indicators; and the description of the 26 February meeting as “failed” (at [29] and [55]). The first three matters would have been discussed at the formal board meetings on 26 February 2019 and 25 March 2019 and/or informal meetings for “alignment” purposes; it was also always open to PPK to seek more information on those issues from Mr Silwal and/or Mr Babu, whether informally or formally (at [59], [60] and [62]). The last concern raised in the 24 March e-mail was a non-issue (at [63]).

14        Ahead of the 25 March meeting, CPK repeatedly insisted that PPK raise his concerns about the management of GBPL at that meeting (at [52]). Mr Silwal also twice attempted to enlist RKK’s help in procuring PPK’s attendance (at [53]). It was undisputed that PPK ultimately did not attend the 25 March meeting as he was ill and went to the hospital that morning (at [56]). Mr Jagetia further proposed that PPK’s 24 March e-mail be considered at a CSAPL board meeting on 27 March 2019 (at [64]).

15        Prior to the 26 April meeting, Mr Jagetia met PPK to ask him about his concerns as expressed in his 24 March e-mail (at [68]). Mr Jagetia and Mr Silwal both made efforts to confirm PPK’s participation at the 26 April meeting (at [70]).

16        On 25 April 2019, PPK sent an e-mail to the GBPL board (“the 25 April e-mail”), in which he raised a new complaint about the decision to replace the Human Resources director and reiterated grievances about the “unilateral” management of the company by the Carlsberg-nominated directors. He indicated that he would therefore not attend the 26 April meeting. In response, CPK, Mr Jagetia and Mr Silwal attempted to: persuade PPK to attend the meeting and discuss his issues there; negotiate with one of the Carlsberg-nominated directors on the GBPL board; and enlist RKK’s help in convincing PPK to attend the meeting (at [20(a)], [30], [71], [74] and [75]).

17        Following the 25 April e-mail, Mr Jagetia sought to persuade the Carlsberg-nominated directors to respond in writing to allay PPK’s expressed concerns (at [78], [81] and [103]). However, the Carlsberg-nominated directors did not oblige, in light of PPK’s refusal to attend board meetings and the accompanying informal meetings (at [79]). They also saw no reason to deal with PPK’s concerns, which were agenda items for the board meetings, in e-mails rather than at “alignment” meetings and physical board meetings (at [79]).

18        CPK’s and Mr Jagetia’s continued efforts to persuade PPK to attend the board meetings were unsuccessful (at [82] to [84]). RKK was also unwilling to intervene where PPK was concerned as RKK was morally committed to giving up his 10% share in GBPL as part of a family settlement (at [88]). Moreover, PPK’s expressed concerns were on the 1 July meeting agenda and could have been discussed at pre-meetings for “alignment” purposes (at [90]).

19        Apart from the 25 March meeting, PPK’s non-attendance of the other board meetings was unjustified (at [96] and [99]). He prioritised the Hari Khetan Campus meeting over the 26 February meeting (at [96]). He expressly refused to attend the 26 April and 1 July meetings when, as a director, his duty was to be present, regardless of the likelihood of him being outvoted on any matter where he disagreed with the likely approach of the Carlsberg-nominated directors (at [96]).

Whether CSAPLH made sham efforts to persuade PPK to attend the board meetings

20        The court rejected Carlsberg’s primary case that CSAPLH’s attempts to persuade PPK to attend the board meetings were shams (at [26]). It would have been foolhardy for CPK to seek to exert leverage against Carlsberg in the manner suggested, given his awareness of the clause 2(c) obligation and the impact of any breach thereof in relation to the outstanding loan under the Loan Agreement (at [26(b)]). Any intended paralysis of GBPL’s ability to transact its business would also cause serious damage to CSAPLH’s own interests because of its 33% interest in CSAPL, which in turn owned 90% of GBPL (at [26(c)]).

Whether CSAPLH used its best efforts to procure PPK’s attendance at the board meetings

21        PPK’s refusal to attend the board meetings emanated from his disagreement with Mr Babu and the other board members over the new sales/marketing model (at [100]). Given PPK’s character and his relationship with CPK, once he had decided not to attend the 26 February, 26 April and 1 July meetings, he was unpersuadable (at [100], [101] and [109]). In refusing to attend the board meetings, PPK was also refusing to attend the antecedent pre-meetings, which he viewed as fruitless since the Carlsberg-nominated directors would always assert their majority on the GBPL board when it came to board resolutions (at [93] and [111]).

22        CSAPLH, through CPK and Mr Jagetia, did use its best efforts to procure PPK’s attendance and its efforts were genuine (at [102]). There was nothing that CSAPLH or CPK could have done to persuade PPK and/or RKK to act any differently, because of the difficult relationships between CPK, PPK and RKK, and because PPK would only respond if the Carlsberg-nominated directors gave way to his demands (at [103] and [104]). Although all efforts after 25 April 2019 to persuade PPK to attend the meetings were and would have been futile, CSAPLH did continue to use its best efforts in the lead-up to both the 26 April and 1 July meetings (at [108] to [110]). CSAPLH was therefore not in breach of clause 2(c) of the Deed of Undertaking and Carlsberg’s claim for the repayment of the outstanding loan on the basis of such breach failed (at [112]).


This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.