Corporate board authority: interlocutory restraint denied absent prima facie ultra vires showing and favourable balance of convenience.

In board-managed companies courts will not grant interlocutory injunctions restraining directors or management unless the applicant establishes a prima facie case that challenged board acts are ultra vires the Act or the articles and the balance of convenience favours interference; participation, acquiescence or subsequent ratification by the applicant undermines equitable relief. Minutes alone were insufficient at interlocutory stage to compel restoration of alleged managerial powers, and statutory representation rules do not support appointment of joint corporate representatives; on the interlocutory materials the applications for interim reliefs were dismissed in favour of the respondent.

---

---

Issues: (i) Whether interlocutory injunctions should be granted to restrain certain persons from acting as directors or exercising managerial powers in the respondent companies pending trial; (ii) Whether reliefs seeking restoration of the applicant's alleged managerial powers and appointment of joint representatives under section 187 of the Companies Act are maintainable at interlocutory stage.

Issue (i): Whether interlocutory injunctions ought to be granted to restrain specified persons from acting as directors or exercising powers in the respondent companies pending disposal of the suit.

Analysis: The applications were considered on the prima facie materials and balance of convenience. Governing principles include recognition of corporate democracy and the rule that in board-managed companies the board exercises management powers (Section 291 of the Companies Act, 1956). The court examined attendance and participation of the applicant in board meetings, subsequent ratification of earlier meetings, asserted knowledge or acquiescence by the applicant, and the absence of clear prima facie proof that challenged board acts were ultra vires. Authority and precedent on interlocutory injunctions require a serious question to be tried and favourable balance of convenience; equitable estoppel and acquiescence were applied where the applicant had participated in or accepted appointments later challenged.

Conclusion: In favour of Respondent.

Issue (ii): Whether the applicant is entitled at interlocutory stage to (a) restoration of managerial powers alleged to have been curtailed and (b) appointment of joint representatives under section 187 of the Companies Act.

Analysis: The court held that minutes relied upon were, as a matter of law and fact at interlocutory stage, insufficient to compel restoration of managerial powers absent a showing that board decisions were ultra vires the Act or articles. Section 187 of the Companies Act, 1956 permits a single corporate representative and does not provide for joint representatives; the corporate structure and shareholding relationships determine representation. The applicant's factual and prima facie case was held inadequate to override the principles of corporate management or to grant the specific statutory relief sought at interlocutory stage.

Conclusion: In favour of Respondent.

Final Conclusion: On the interlocutory material and balance of convenience the applications for interim reliefs were dismissed, reflecting that board decisions in board-managed companies will not be interdicted in the absence of prima facie proof of ultra vires action or a demonstrable inequity that outweighs corporate democracy.

Ratio Decidendi: Where a company is board-managed, courts will not grant interlocutory relief restraining the exercise of board powers unless the applicant establishes a prima facie case that the board's actions are ultra vires the Act or articles, and the balance of convenience favours interference; participation, acquiescence or subsequent ratification by a director militates against equitable relief.

---