A bankrupt turned to a businessman for a loan to annul his bankruptcy so that he can sue his brother over a property dispute.

In all, Mr Rakesh Kumar Sharma, 57, got a loan totalling $316,750 from Mr Kor Yong Koo.

Mr Rakesh, however, lost the suit against his 61-year-old brother Ashok and his wife and was ordered to pay $156,000 in legal costs to the couple.

He did not, and last month, Mr Kor - a non-party to the lawsuit - was ordered to pay the amount by the High Court.

Justice Kannan Ramesh, in his judgment grounds, said: "There is no hiding the fact that Mr Rakesh was a bankrupt when Mr Kor first started disbursing monies to him."

He added: "This prima facie meant that Mr Rakesh had little, if any, means of repaying the loan unless one accounted for the recovery from (the lawsuit). Mr Kor knew that."

The judge made clear that Mr Kor was liable as he furnished the funds "for the purpose of obtaining a profit from the fruits of the litigation", based on the facts of the case.

He further said that Mr Kor's position was different from a lender who extends general-purpose interest-bearing loans to people with little or no money who then use the funds to finance litigation.

Such lenders, unlike Mr Kor, should not be liable to bear the litigation costs, he added.

But in Mr Kor's case, the judge noted that he sought to recover exorbitant profits as shown by the 30 per cent annual interest rate on the loan.

Hence, he could not be deemed a "pure funder", said Justice Kannan in his oral judgment.

The judge found that the basis for giving the loans hinged on the money being recovered from the outcome of Mr Rakesh's lawsuit (Suit 963) against his brother, with the interest rate designed for Mr Kor to enjoy a share of the proceeds.

"Accordingly, I find that Mr Kor had the requisite 'close connection' with Suit 963," Justice Kannan said.

The saga began in October 2013, when Mr Rakesh was made a bankrupt for the second time.

In 2014, he asked Mr Kor for the loan to travel to India to stake his claim on his father's properties there and to start litigation against his brother Ashok and his wife in relation to his inheritance.

Mr Kor, whose business is in ship chandling and textiles, gave $100,000 initially to clear the second bankruptcy and agreed to further sums at a monthly interest rate of 2.5 per cent.

Mr Rakesh had his two bankruptcies annulled in 2015.

In May 2017, he lost his suit and when he did not pay the $156,000 in costs, Mr Ashok made him a bankrupt and, through his lawyer Mahmood Gaznavi, sued Mr Kor for the money.

Mr Kor's lawyers, Mr Rabi Ahmad and Ms Varsha Krishnan, countered that he was a disinterested party who gave a personal loan to be repaid with interest, regardless of the outcome of Suit 963.

Justice Kannan found that the evidence showed the prospect of Mr Rakesh repaying the loan was "inextricably linked to the success of Suit 963. By providing funds to annul both bankruptcies, Mr Kor removed the only obstacle to Mr Rakesh commencing Suit 963".