SINGAPORE - A 72-YEAR-OLD woman who bought shares belonging to her son's bankrupt company for half their value has been ordered to return the lot.
Satiyabama, the widow of veteran lawyer Karuppan Chettiar, bought around 400,000 shares of profitable Stansfield College for $1 a piece.
At that time, the shares belonged to TSG Investments, which owned more than a fifth of the college.
The directors and majority shareholders of TSG, a holding company, are award-winning educationist and entrepreneur Kannappan Chettiar and his wife Cenobia Majella, who was principal of the college.
TSG was wound up last year and placed in the hands of liquidators, who are seeking to reclaim the Stansfield shares as part of its bid to repay creditors.
The liquidators, represented by lawyer Kenneth Pereira, argued that the sale of the shares to Madam Satiyabama was meant to strip TSG of its main asset so as to prevent payouts to its creditors.
They said the shares were worth at least $2 each.
Mr Chettiar denied the claims against his mother and argued that they were made based on circumstantial evidence.
He added that the funds for the purchase of the shares came from his parents' joint account and was made in his mother's name at his father's request as the latter had been due to undergo an operation.
He said he had discussed the share value with his father for several months before he passed away in October 2012.
Madam Satiyabama said she bought the shares when her son told her TSG was facing liquidity problems and had a $900,000 DBS overdraft which needed to be settled. She made clear in court documents she was not literate in English and was not involved directly or indirectly in TSG or Stansfield.
Judicial Commissioner Edmund Leow last month held that the shares were undervalued within the meaning of the Companies Act and quashed the March 2012 deal between Madam Satiyabama and TSG.
The High Court ruling added that any portion of the shares sold by her to a third party would also be void.
The low price at which the shares changed hands could not be explained by normal commercial practice, and the fact they were sold to the directors' own family member pointed to an undervaluation, said the liquidators.
It is understood the shares are in the process of being transferred back to TSG.
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