There is an case ‘indian couple Owsals sued ANZ bank for 1.5-2.5 billion Dollors’
‘Indian rich couple, Owsals sued ANZ bank for 1.5-2.5 billion Dollars’
‘Indian rich couple, Owsals sued ANZ bank for 1.5-2.5 billion Dollars’
A case has been filed in the Supreme Court of Australia by an Indian couple, Pankaj and Radhika Oswal, on the manner in which the sale of their fertilizer plant, Burrup Fertilizers, was conducted. Through their barrister, Tony Bannon, the couple argues that the plant was sold for less than half of its actual value. Further, it has been alleged that the couple was forced to sign the deal by seniors from the bank, with their life being placed under threat. While the bank was trying to recover its money which was owed to them by the couple, there was little regard towards the interests of the couple. The bank and the receivers, PPB Advisory have both been sued by the couple who need a compensation of between 1.5 to 2.5 dollars in damages. This paper evaluates the case of the couple versus the bank and the receivers by looking at the various aspects from business law, corporate law, Bankruptcy, shareholder’s equity, Liquidator and Winding up in a bid to understand the law suit and substantiate viability of the suit. The issues that arise from this case can be categorized into three. To begin with, the couple is suing the bank for selling their asset at a value that is way less than the actual value. Second, the couple has been forced to sell at this low price. This has been achieved through threats and bullying. Third, there has been a breach of duty by the receiver in getting the right value of the assets before selling them.
According to the Australian business law, the bank acted in its rights to wind up the company owned by the Oswals in a move to recover the debt owned by the couple. In fact, be obtaining a receiver to in a move to control the secured asset, ANZ bank was working well within its rights to recover its money. According to Jones (2007), the relationship between banks and businesses has always placed banks at an advantage over their borrower clients. This has sometimes resulted in devastating consequences for the borrower, and the case of Oswal vs ANZ bank is not the first. The case of the Walter Family and the National Australia Bank is another example where the bank acted in its own interests in trying to recover its money. In this case, the bank was placed at an advantage of withholding some information from the client, only providing information that it deemed necessary for the client1.
While the bank had a right to act on its own interest during the sale of the shares owned by the Oswals, it was its duty, together with that of the receiver to act in good faith2 (Squelch, 2009). The sale of the shares at a value that is less than half the actual value is a demonstration of the lender acting in bad faith. During debt reclamation through auction, here has always been tension between the lender and the borrower. The borrower wants their property to be sold at the best possible market price while the lender’s objective is to get their money back, period. In most cases, it is very natural for the borrower to place their property at a value that is greater, both for emotional and for financial purposes. In a case of Nolan versus MBF Investments, the court found that the lender had completely disregarded the interests of the borrower and found no need for the lender to have sold the borrower’s property only for the reason of getting back its money. During the ruling, the court held that the sale of the borrower’s property had been done with the full knowledge of all relevant facts, including the impact that it would have on the borrower and his family. By exercising its power of sale that way, the lender indirectly destroyed the borrower’s legal interest in their own property and was deprived of full ownership of that property through exercising his redemption right. In the ruling, the court agreed that there was need to act in the best interests of both parties3.
Upon issuance of the notice on intention to recover the owed money through sale of the shares, or otherwise, it is required that the notice meets certain requirements4. The notice needs to be clearly explaining the default. The legislation is silent on the manner that banks, or generally, lenders, should conduct the sale of the borrower’s property during debt reclamation. In the Australian law, there is general agreement on the need by the lender to act in good faith while exercising its power of sale. In the case of Pendlebury v Colonial Mutual Life Assurance Society Ltd, the court held that the lender, while reclaiming the money owed to it by the borrower, disregarded the interest of the borrower by not sufficiently advertising the property so as to get a fair price from the market5. In this case, the judge stated that if the lender had acted in good faith, it would be very difficult, if not impossible, to establish that the lender was guilty of breach of duty. In a separate case of Forsyth v. Blundell, Judge Lindley, L. J ruled that it was neither right, proper nor legal for the lender to act fraudulently or recklessly in sacrificing the property of the borrower.
The requirement is for the lender to act in good faith. While it is not clear what “good faith” really means, and what is included in it, it is considered reckless for the lender to act in a manner that the property of the borrower is sacrificed6. By selling the shares of the couple at a value that is less than the real value, the bank did not consider the interest of the couple. Further, the bank would be guilty of not creating competitive tension during the bidding process by not offering all the three parts of the company for sale7. These would include the stake of the Oswal’s, all shares under Burrup Fertilizers and all assets that were owned by the company.in fact, it was later learnt that the sale was done in a way as to appease one shareholder, Yara Australia, which had initially owned 35% of the company and was granted preemptive rights on the other shares that remained. This implies that the process was run in a manner that implied there was going to be only one effective bidder, Apache Fertilizers. In the end, it turned that Apache increased its stake to 49% while Yara Australia increased its stake to 51% of Burrup Fertilizers.
In addition to acting in good faith, it is legally right for the lender, while attempting to reclaim its money, to sale at the right price. In such cases, the borrower will always want their property to be sold for the right price, while the lender will want to sell at whatever price so long as they get back their money. The power is conferred upon the lender to sell at whatever price and reclaim their money, and then give back any extras to the borrowers. This is not to mean that the lender should disregard the interests of the borrower completely. In the case of Commercial and General Acceptance Ltd v Nixon, Judge Gibbs ruled that while the mortgagee was not a trustee of the mortgagor’s power of sale, it was clear that during the sale of the mortgaged property, they are not entitled to sacrificing the mortgagor’s interests in surplus of the sales proceeds8. This matches up with the requirement to act in good faith. By acting this way, reasonable steps are taken to ensure that the property is sold at a fair price and failure to act this way amounts to breach of duty. In a separate rule by Judge Griffith, during the case of Pendlebury, it was stated that the lender is bound to sell the property failry and take all the necessary steps to ensure that a proper price is obtained, although he may go ahead and conduct a forced sale all with the intention of reclaiming the money owed to them9. In his ruling, Griffith held that if the lender fails to take all necessary precautions of ensuring a fair price is obtained, and all facts are displayed to prove that the lender acted carelessly during disposal of the property, then they shall be guilty of recklessness and acting in bad faith10. The ANZ Bank can be said to have acted in its own interests by not obtaining the right price for the shares owned by the Oswal’s. This can be confirmed by the fact there was no tension in the bidding process, making it easy for the other shareholders to increase their stake in the company. It can be stated that they acted in a manner as to please the other shareholders.
During signing of the documents, the Oswal’s were bullied into agreeing to the demands of the bank. In fact, the Oswal’s state they were threatened on death in case they did not sign the proposal by the bank. This is an act of duress, which according to the Australian law, is a criminal offence. In the case of Attorney-General v Whelan  IR 518, per Murnaghan J (Irish CCA), it was stated that threats directed towards immediate death is considered to be criminal11. It would be left to the Oswal’s to prove to the court that there truly was some threats to their lives, and for the defendant, in this case, ANZ Bank, to prove that they were not causing an act of duress. There is no good reason for the Bank to state that the threats to the lives of the Oswals was a necessity. If that were the case, the case of duress would have little to show for. In cases where the defendant has proven that there was necessity in committing duress, there has been mixed opinions on whether the case was valid. However, when the threat is directed towards leading to death, there certainly is a case for the bank to answer12.
The case of the Oswal couple against the ANZ Bank is one that has various reasons for the bank to be found guilty and charged. To begin with, the bank has not acted in good faith while selling the shares. Second, the bank sales the shares of the couple at a price that is way lower than it should have been sold for. The last charge is the charge of duress, where the couple are threatened that their children shall be orphaned, should they not sign the agreement drafted by the bank. While the bank has the right to reclaim any money owed to it by the couple, they are obliged to act in the best interest of all parties involved.
Australian Competition & Consumer Commission, 2004, Guide to Unconscionable Conduct. Australia.
AAP, 2016, “Bank had ‘no regard’ for Pankaj and Radhika Oswal’s interests, court told” available on September, 11, 2016 at:
CPA Australia, 2012, Fundamentals of Business Law, BPP Learning Media Ltd, Australia.
Hilton, M. & Barbaro, J., 2009, “Managing the Mortgagor and Mortgagee Relationship,” 16 Australian Law Journal 204.
Jones, E., 2007, The National Australia Bank v Walter/Palatinat: A Case Study in the Adverse Small Business Environment in Australia, University of Sydney, Australia.
Lanham, D., Wood, D., Bartal, B. & Evans, R., 2006, Criminal Laws in Australia, The Federation Press, Sydney.
LRC, 2006, Consultation Paper Duress and Necessity, Shelbourne Road, Dublin.
Sutton, R.J., (1974), “Duress by Threatened Breach of Contract,” McGill Law Contract, Vol 20, pp. 553-586.
Patten, S., 2007, “Bank regulator warns on bad loans”, Australian Financial Review.
Squelch, J., 2009, “Mortgagees’ Power of Sale and the Duty to Sell at Market Value,” The Finance Industry, Vol. 11, pp. 49-56.
1 Jones, E. 2007, The National Australia Bank v Walter/Palatinat: A Case Study in the Adverse Small Business Environment in Australia, University of Sydney, Australia
2 Squelch, J. 2009, “Mortgagees’ Power of Sale and the Duty to Sell at Market Value,” The Finance Industry, Vol. 11, pp. 49-56.
3 CPA Australia, 2012, Fundamentals of Business Law, BPP Learning Media Ltd, Australia.
4 Hilton, M. & Barbaro, J. 2009, “Managing the Mortgagor and Mortgagee Relationship,” 16 Australian Law Journal 204.
5 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676.
6 Forsyth v. Blundell  HCA 20, 481, in which the mortgagee sold a property for $120,000 to a second purchaser by means of a private sale and did not inform the first purchaser of the sale who had expressed an interest in purchasing the property for $150,000.
7 Australian Competition & Consumer Commission, 2004, Guide to Unconscionable Conduct. Australia.
8 Commercial and General Acceptance Ltd v Nixon (1981) HCA 70, 3. See also Investec Bank (Australia) Ltd v Global Pty Ltd  VSCA 97
9 Pendlebury (1912) 13 CLR 676 (Barton J).
10 Patten, S., 2007, “Bank regulator warns on bad loans”, Australian Financial Review.
11 LRC, 2006, Consultation Paper Duress and Necessity, Shelbourne Road, Dublin.
12 Sutton, R.J., 1974, “Duress by Threatened Breach of Contract,” McGill Law Contract, Vol 20, pp. 553-586.