Shareholder challenge to slump sale fails where no proprietary interest exists and injunction standards are unmet.

Temporary injunction in a shareholder challenge to a slump sale requires a prima facie case, balance of convenience and irreparable injury. The article notes that where the transfer of a division was approved by shareholders by postal ballot and the statutory procedure was complied with, disputes over the quantum and timing of consideration under the slump sale agreement may be matters for arbitration. It also states that a shareholder has a right to participate in profits but no proprietary right in company assets, and therefore cannot seek injunctive relief against implementation of a corporate transaction affecting those assets. Non-disclosure of material facts further weakens equitable relief.

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Issues: Whether the plaintiff was entitled to continue the interim injunction restraining implementation of the slump sale of the Wind Energy Division, and whether a shareholder had locus standi to challenge the transaction and seek relief concerning company assets.

Analysis: The applications for temporary injunction had to satisfy the settled requirements of a prima facie case, balance of convenience, and irreparable injury. The transfer of the Wind Energy Division had been approved by the shareholders by postal ballot, including the plaintiff, and the procedural requirements under the Companies Act, 1956 were found to have been complied with. The record also showed that the consideration under the slump sale had been worked out and the trust shares allotted, while the disputes raised by the plaintiff regarding the quantum and timing of the 12.5 per cent equity component arose from the contractual terms of the slump sale agreement and were matters for arbitration. A shareholder was held to have a right to participate in profits but no proprietary right in the company's assets, and therefore could not maintain an objection directed against the company's property or its contractual implementation. The plaintiff had also not made full disclosure of material facts, and the balance of convenience was found to lie in favour of the transferee company.

Conclusion: The plaintiff failed to establish a prima facie case or a favourable balance of convenience, and was not entitled to injunctive relief.

Final Conclusion: The interim injunction was vacated and the applications were dismissed, leaving the shareholder's challenge without interim protection.

Ratio Decidendi: A shareholder has no proprietary interest in the assets of a company and cannot obtain temporary injunction against a corporate transaction approved by the shareholders when the contractual dispute is referable to arbitration and the equitable requirements for injunction are not satisfied.

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