A High Court judge has thrown out a defence put up by two Masala restaurant bosses to a liquidators' claim.

Liquidators of firms formerly associated with the Bucklands Beach branch of the Indian food chain have taken legal action against Rajwinder Grewal and Joti Jain. Grewal was a director and shareholder of two wound-up companies which formerly operated the east Auckland restaurant. The first, CHK Hospitality, was set up in 2012 and sold the restaurant business to the second firm, Bucklands Beach Ltd, the following year.

Creditors are claiming nearly $84,000 from CHK and almost $300,000 from BBL.

Jain was a director of BBL for less than a fortnight in 2013 and liquidators Damien Grant and Steven Khov allege she was a shadow director of CHK and also involved in the management of BBL.


Grant and Khov allege that BBL was a phoenix company and say they are seeking payment of the debts owed to creditors and liquidators fees totalling almost $689,000.
Grewal and Jain denied the claims but Associate Judge Tony Christiansen has thrown out their defence.

In a decision released publicly this week, Associate Judge Christiansen said:
"The court's view is that the statement of claim of the plaintiffs has clearly and carefully detailed the operation of a food supply business, the transfer of which was effected by the defendants from one company to another in their control. In that process BBL failed to pay the sum of $245,000 agreed to be paid to CHK. Also BBL incurred a number of debts including to the Inland Revenue Department a sum of about $15,000. BBL creditors totalled not less than $52,000. As well the liquidators seek payment for fees in connection with the liquidation of both CHK and BBL. The defendants have long since been made aware of deficiencies with their pleading and failure to provide sufficient initial discovery. In the circumstances it is appropriate to strike out the statement of defence."

The matter will now move to a formal proof hearing, where the liquidators will need to prove their claims despite the absence of a defence.

In an unrelated case, Jain, Grewal and Masala founder Rupinder Chahil were last year named by Inland Revenue as people of interest in a tax probe.

"I believe that the parties and companies involved in the financial operations of the Masala chain of restaurants, including Mr Chahil, Ms Jain, Mr Grewal and a number of relatives of those parties, have been involved in evading the assessment and payment of tax by systematically stripping cash from the restaurants and neither declaring cash sales in GST returns, nor returning cash income to [IRD]," Inland Revenue investigator Elena Bryleva alleged in an affidavit to the High Court last November.