Contractual share-transfer covenant justified interim protection, while restraint over stock-in-trade was refused to avoid business disruption.

A contractual covenant in loan documents prohibiting disposal of shareholding without lender approval was treated as sufficient to justify interim protection where a proposed transfer could alter control and affect the security position. The court found that preservation of the agreed status quo and secured assets warranted restraint against transfer of the specified shareholding and alienation or encumbrance of the immovable security. However, relief was declined in respect of stock-in-trade, because a blanket restraint over movable business assets would interfere with trading and exports. Appointment of an Advocate Commissioner to inventory those movables was also refused, with the parties instead left to arrange periodic inventory by representatives.

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Issues: (i) whether the applicant established a prima facie case and balance of convenience for interim protection against transfer of shares and alienation of securities; (ii) whether interim injunction should be granted against transfer of 26% shareholding and alienation of the A schedule property; and (iii) whether an Advocate Commissioner should be appointed to inventory the B schedule movables.

Issue (i): whether the applicant established a prima facie case and balance of convenience for interim protection against transfer of shares and alienation of securities.

Analysis: The loan documents contained a specific undertaking that the promoters would not dispose of their shareholding without the lender's approval, and the company nevertheless proceeded with a proposed transfer of a substantial block of shares to a foreign entity. That contractual stipulation, coupled with the alleged breach and the risk of change in the board composition and security position, was sufficient to show an arguable right requiring preservation pending trial. The competing hardship to the company was considered, but the court found that the applicant's interest in maintaining the agreed security and status quo required interim protection.

Conclusion: The applicant established a prima facie case and the balance of convenience for limited interim relief in favour of preserving the shareholding position and secured assets.

Issue (ii): whether interim injunction should be granted against transfer of 26% shareholding and alienation of the A schedule property.

Analysis: The court treated the share-transfer restraint as flowing from the express contractual condition requiring prior approval of the lender. Since the proposed disinvestment could alter the company's control structure, interim restraint was warranted until the lender's consent was obtained. As regards the A schedule immovable property, the borrower itself gave an assurance that it would not be alienated or encumbered, and that security therefore required protection by injunction.

Conclusion: Interim injunction was granted against transfer of the 26% shareholding and against alienation or encumbrance of the A schedule property.

Issue (iii): whether an Advocate Commissioner should be appointed to inventory the B schedule movables.

Analysis: The B schedule items were treated as stock-in-trade and the court accepted that a blanket restraint on them would obstruct the company's business and exports. Instead of appointing a Commissioner, the court considered that the parties could protect their interests by sending representatives periodically to take inventory, with cooperation from the company.

Conclusion: Appointment of an Advocate Commissioner was refused, and no interim injunction was granted in respect of the B schedule movables.

Final Conclusion: The application succeeded only to the extent of preserving the agreed shareholding and immovable security, while relief relating to the movable stock was declined in order to avoid disrupting the company's operations.

Ratio Decidendi: Where loan documentation contains a clear covenant prohibiting disposal of shareholding without the lender's approval, a court may grant interlocutory injunction to preserve the contractual security and status quo, but may decline restraint over stock-in-trade if such restraint would unduly impede the borrower's business.

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