Corporate veil and interim restraint may apply where entities appear to be used as sham vehicles to divert funds and hold assets.

Corporate personality may be disregarded where incorporation is used as a device, cloak, or sham to perpetrate fraud or defeat legitimate claims, and an adverse inference may follow when material facts lie within a defendant's special knowledge but are withheld. On the materials discussed, incomplete disclosure of shareholding, capital structure, control, and the source of funds supported a prima facie view that the entities were being used to hold properties and keep them beyond the plaintiff's reach. The text also notes that attachment before judgment and ad interim restraint may be warranted to preserve disputed properties and prevent alienation pending trial.

---

---

Issues: (i) Whether the corporate veil could be lifted to restrain companies said to have been formed and used to receive diverted loan funds and acquire properties, and (ii) whether attachment before judgment and ad interim injunction were warranted on the materials before the Court.

Issue (i): Whether the corporate veil could be lifted to restrain companies said to have been formed and used to receive diverted loan funds and acquire properties.

Analysis: The pleadings and affidavits indicated that the companies gave incomplete and evasive accounts of their shareholding, capital structure, control, and the source of funds for the properties in question. The Court held that the doctrine of corporate personality is not immune from exception and may be disregarded where incorporation is used as a device, cloak, or sham to perpetrate fraud or to defeat legitimate claims. Where relevant facts lie specially within the knowledge of the defendants and are withheld, an adverse inference may be drawn. On the materials then available, a prima facie case existed that the corporate entities were being used to hold the properties and to place them beyond the reach of the plaintiff.

Conclusion: The corporate veil could be lifted at this stage, and the companies were not entitled to protection against interim restraint.

Issue (ii): Whether attachment before judgment and ad interim injunction were warranted on the materials before the Court.

Analysis: In view of the defendant's conduct, the failure to file a reply, the vague and non-disclosing affidavits of the other defendants, and the prima facie inference of diversion of funds, the Court found sufficient basis for interim protection. The properties appeared to represent the very assets acquired through the disputed funds, and the plaintiff would be prejudiced if alienation were permitted pending trial.

Conclusion: Attachment before judgment and ad interim restraint were justified, and the injunction against alienation of the specified properties was upheld.

Final Conclusion: The appeal succeeded, the interim protection in favour of the plaintiff was maintained, and the cross-objections of the first defendant failed.

Ratio Decidendi: Corporate personality may be disregarded at the interim stage where the materials disclose a prima facie case that the entity is being used as a sham or instrument of fraud and the relevant facts are withheld, justifying adverse inference and interim restraint to preserve the subject matter of the suit.

---