Supervised sale of company assets may replace interim restraint when safeguards protect company and shareholder interests.

Interim restraint on transfer of a company's assets may be modified where a supervised sale better preserves stakeholder value. In light of financial distress, discharge of substantial tax liabilities, revival of operations, and deterioration of buses after prolonged idleness, the Court permitted sale by private negotiations in the presence of a Local Commissioner. The sale proceeds were required to be deposited in a scheduled bank, existing shareholders were to be given an opportunity to purchase at a higher price, and the sale remained subject to Court confirmation. The controlled process was used to protect the company, shareholders, and prospective purchasers.

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Issues: Whether the interim restraint on transfer of the company's assets should be vacated and whether the company's buses could be permitted to be sold under court-supervised conditions.

Analysis: The application was considered in the light of the company's financial distress, the discharge of substantial tax liabilities, the revival of operations, and the condition of the buses after prolonged idleness. To safeguard the interests of the company, shareholders, and purchasers, the sale was directed to be conducted by private negotiations in the presence of a Local Commissioner, with the sale proceeds to be deposited in a scheduled bank. Existing shareholders were to be given an opportunity to purchase at a higher price, and the sale was to remain subject to confirmation by the Court.

Conclusion: The restraint order was modified by permitting the sale of the buses under supervision and on the stated safeguards, and the application was disposed of accordingly.

Final Conclusion: Interim relief was moulded by allowing sale of the buses through a controlled process, while preserving oversight to protect the company and shareholder interests.

Ratio Decidendi: Where preservation of company assets can be better served through a supervised sale with safeguards, the Court may modify an interim restraint and regulate the manner of disposal to protect stakeholder interests.

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