Lawsuit to recover £2m from Dubai-based businessman thrown out

Proceeds from the sale of late grandmother's jewels were targeted by liquidators

The Royal Courts of Justice on The Strand in central London. AFP
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British administrators have failed in an attempt to recover money from the Dubai-based grandson of an Indian millionaire after an inheritance passed through the books of a bankrupt hotel development.

Siddhant Varma, 29, had been given £2 million ($2.7m) from the sale of his late grandmother's £5m diamond jewellery collection, London's High Court heard.

His father, Sanjiv Varma, had told his son she had wished him to receive a £2m inheritance and he sold the jewels through his UAE company, Grosvenor Consultants FZE, to a UK property development company.

The court heard that £2m was transferred from Grosvenor Consultants FZE to Nirmala Varma's grandson in 2017.

Grosvenor Property Developers Limited was incorporated in December 2016 for the purpose of acquiring and redeveloping the Grosvenor Hotel in Bristol into student accommodation.

The development and purchase never took place and the liquidators for the company are now seeking to retrieve £7.6m invested into the scheme.

The High Court heard Mr Varma's father had allegedly been a de facto director of Grosvenor Property Developers Limited. The liquidators called into question the existence of the diamonds and had sought to retrieve the £2m which had been given to his son.

This week, Mr Justice Michael Green dismissed an appeal by the liquidators over the funds.

“An important part of this appeal and the other judgments is the story of the diamonds and jewellery,” he said.

“The first respondent, Sanjiv Varma, has maintained that the diamonds were family heirlooms and that his mother, Nirmala Varma, had given him the diamonds with instructions to sell them and to give £2 million of the proceeds to her grandson.

“The first respondent said that the diamonds were invested by way of capital contribution in GCFZE, a company incorporated in the United Arab Emirates and wholly owned and controlled by the first respondent.

“GCFZE then purportedly sold the diamonds to the company for £4.95 million, of which £3.123 million was paid, and out of that, Siddhant Varma, was paid £2 million. Siddhant Varma's case throughout is that he was not involved at all in the company's business and he was expecting and thought that the £2 million was indeed an inheritance from his grandmother that had been promised to him.

“The appellants' case is that this was a fraud perpetrated on the company whose money was simply misappropriated.”

A previous judge had also dismissed the case against Siddhant Varma, ruling that even though it was an “extraordinary story” he had “no knowledge” of the property company.

“Siddhant Varma had no knowledge of the business in Bristol and he trusted his father as he appeared to be a wealthy and successful businessman.

“The judge therefore rejected the knowing or unconscionable receipt claim against Siddhant Varma on the grounds of a lack of knowledge.”

Mr Varma's lawyers told The National they were delighted with the result.

“We are delighted that following the trial judge dismissing all claims against our client, Mr Siddhant Varma, the appeal judge has followed suit, again totally vindicating our client," his lawyer Kelly Tinkler, a partner at Keystone Law said.

"After advising him on this case for over two years, and numerous court hearings, the latest judgment has once again totally exonerated him.”

The liquidators have retrieved £20m from the other respondents in the case.

Updated: July 22, 2021, 10:37 AM
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