A JUDGE has ruled that three ‘rag trade’ bosses cannot reclaim around £4.6million from a Blackburn chemist-turned-property investor over a failed paradise island deal.

Pharmacist Shokat Mohammed Dalal, through his brother Khalid Dalal, received a series of payments in 2008 from three clothing firm magnates, to invest in the purchase of a plot in an artificial archipelago in Dubai called The World, a court heard.

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But the emirate’s property market suffered a spectacular crash in 2008, following the collapse of US banking giants Lehman Brothers, and their chance to make a quick return on selling on their purchase - known only as D55 - soon evaporated.

Kushinder Singh Ghura and his brother Apinder Singh Ghura, who run Newcastle-based Chan Casuals Ltd, and Amarjit Singh, of Boi Trading Company, of Bury New Road, Manchester, took Shokat Dalal to the High Court, insisting their ‘loans should be repaid in full’.

Now a chancery judge has ruled that the trio, who made investments in person and through their companies, are not entitled to a penny from the Dalals after a lengthy legal battle.

A High Court hearing in Manchester was told that the Ghuras and Mr Singh had initially transferred £1.5million to Khalid Dalal’s firms, KD Investment Company and Blackburn Clothing Company Ltd, of Mincing Lane, in July 2008 - £600,000 had been repaid after the Dubai property crash but £900,000 was said to still be owed to the investors.

Later Singh alone loaned £400,000 to Khalid, most of it in cash, which it was claimed was at Shokat’s behest.

But chancery judge Mr Justice Norris said that the claimants were prepared to deploy ‘deceitful, dishonourable and manipulative behaviour’ in pursuit of their case, including the creation of a ‘false document trail’, to establish a web of bogus loan agreements.

The judge added: “I regarded Shokat as the most credible of the factual witnesses (thought that certainly does not mean he was completely reliable). I thought that in general (although not invariably) he was more likely to be closer to the truth than any of the claimant’s witnesses.”

Mr Justice Norris also said it was ‘a oddity’ as to why the three claimants were not seeking judgements against Khalid Dalal, who had first secured the money from the trio.

However the court heard that Khalid was involved in a £3.5million-a-year business partnership with Serena Bellamy, Mr Singh’s daughter, which the claimants apparently didn’t want to jeopardise.

The court was also told that a hearing had been staged by the Dubai World Tribunal over the collapse of the World LLC, one of the property companies involved in the island investment scheme, including D55. Judges ruled that £3.2million of a £11.3million award related to D55.

Mr Justice Norris dismissed the £900,000 claim, made on behalf of Chan and Boi, Mr Singh’s £400,000 claim, along with related interest payments, and the £3.3million sought from the Dubai ruling.

But the judge did rule that Shokat must hold any recovered money, in respect of D55, paid by creditors as a result of the Dubai tribunal, in trust so the claimants could be repaid, in dirhams, the currency of Dubai, to the value of their contributions for the original deposit.