London, Nov. 5 -- The High Court of England and Wales has ordered Shapoorji Pallonji Group's UK construction business--Shapoorji Pallonji Mideast LLC (SPME)--headquartered in the UAE, to pay £3.5 million (approximately Rs.44 crore) to two insurance companies following a dispute over a construction project in Barking, east London. In a judgment handed down last week, deputy high court judge Adrian Williamson KC ruled in favour of Ion Surety Company S.A. and Ion Insurance Company Inc., holding that SPME was legally bound by an indemnity agreement signed on its behalf in February 2020. The court rejected the company's principal defence that the employee who signed the agreement did not have the authority to commit it to the financial obligation. The dispute arose from a construction project at Axe Street in Barking. On May 3, 2020, Shapoorji Pallonji UK Limited (SPUK) entered into a contract with Sherhill (Barking) Limited for the redevelopment of the site. The project was valued at £35 million (Rs.445 crore). As part of the contractual arrangements, Sherhill required a £3.5 million on-demand performance bond to protect itself against potential defaults by the contractor. Ion Insurance issued the bond, while Ion Surety provided reinsurance support. Before issuing the bond, the insurance companies required an indemnity from SPME, which acted as the group's parent company for the transaction. The indemnity agreement, also known as a cross-company indemnity (CCI), was signed on behalf of SPME by Robert O'Leary. Under its terms, SPME agreed to reimburse the surety for financial losses, claims and expenses arising from the bond, subject to a liability cap of £3.5 million. The dispute emerged in August 2023 when Sherhill made a claim under the bond. SPUK was subsequently wound up by the English court on August 9, 2023. Ion Insurance faced legal proceedings from Sherhill and eventually agreed to pay £3,657,684.29 in settlement in November 2023. Ion subsequently sought reimbursement from SPME under the indemnity agreement. However, SPME refused to pay, arguing that O'Leary had no authority to sign the agreement and that it was therefore not legally binding. The case centred on who had the authority to sign documents on behalf of SPME. The company's Memorandum of Association (MOA), revised in September 2016, identified Rajiv Kumar Ruplal Kakkaras as its manager, and gave him extensive powers to manage the business. Importantly, the document also allowed him to delegate these powers to other individuals through written authorisation. SPME argued that no such formal authorisation had been given to O'Leary. It maintained that only an appropriately authorised individual could commit the company to an indemnity of this nature under Dubai law. However, the judge found that the company's own documents and conduct contradicted its defence. Mohan Dass Saini, another senior executive, had signed the company's financial statements and other important documents in managerial capacities. The court concluded that authority had been delegated from Kakkar to Saini and subsequently to O'Leary. A key document the court relied on was a board resolution dated February 16, 2020, approving the company's entry into the guarantees and indemnity arrangements connected with the Barking project. The resolution was signed by Saini as Company Secretary/Chairman. The judge also criticised SPME for failing to produce key witnesses who could have explained the circumstances surrounding the signing of the indemnity. These included Kakkar, Saini and O'Leary. Their absence was considered significant because they could have provided direct evidence about the company's internal authorisation process....