Civil jurisdiction and interim injunction principles limited relief where security over company assets would disrupt contractual and secured-creditor rights.

Civil court jurisdiction was held not to be barred for interlocutory relief arising from a contractual and commercial dispute, because the relief was injunctive and not shown to lie exclusively before the Companies Act Tribunal. Majority shareholders were accepted to maintain the application in a representative capacity on the basis of urgent company prejudice and the need to protect the company's interests. A mandatory interim injunction to compel consent for creation of security over company assets was refused because such relief would alter rather than restore the existing position, did not arise from the plaintiff's cause of action, and could not override express contractual rights or prejudice secured-creditor priority.

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Issues: (i) whether the civil court's jurisdiction was barred under Section 430 of the Companies Act, 2013 in respect of the interlocutory relief sought; (ii) whether the applicants, as majority shareholders, could maintain the application in a representative capacity on behalf of the company; and (iii) whether a mandatory interim injunction could be granted directing the plaintiff to consent to creation of security over the company's assets or on equitable grounds.

Issue (i): whether the civil court's jurisdiction was barred under Section 430 of the Companies Act, 2013 in respect of the interlocutory relief sought.

Analysis: The relief claimed in the application arose from the contractual and commercial arrangement between the parties and concerned the company's ability to raise funds to meet an immediate obligation. The dispute was treated as a civil dispute and not one that was shown to fall exclusively within the domain of the Tribunal under the Companies Act. The existence of a statutory remedy under Section 241 was held not to oust civil jurisdiction where the relief sought was injunctive and not one that could be adequately and satisfactorily addressed before the Tribunal.

Conclusion: The application was not barred by Section 430 of the Companies Act, 2013.

Issue (ii): whether the applicants, as majority shareholders, could maintain the application in a representative capacity on behalf of the company.

Analysis: The applicants pleaded an urgent necessity to act for the company to avert imminent financial prejudice and to comply with the Supreme Court's deposit direction. On that footing, and having regard to the majority shareholding and the asserted need to protect the company's interest, the Court accepted that the application could be entertained in a representative capacity.

Conclusion: The applicants were held entitled to maintain the application in a representative capacity.

Issue (iii): whether a mandatory interim injunction could be granted directing the plaintiff to consent to creation of security over the company's assets or on equitable grounds.

Analysis: A mandatory interim injunction was found to require a strong case, restoration of the last non-contested status, and a relief that could properly be granted as final relief and that arose from the plaintiff's cause of action or was incidental to it. The relief sought would have altered the existing position rather than restored it, and it did not arise from the plaintiff's cause of action in the suit. The Court also held that equity could not override the express contractual allocation of rights, especially where the plaintiffs were secured creditors and the proposed charge would prejudice their priority. The applicants' reliance on an earlier term sheet and on the company's financial exigencies did not justify encumbering the company's assets in the manner sought.

Conclusion: The mandatory interim injunction and equitable relief were refused.

Final Conclusion: The application seeking directions to create security over the company's assets and to restrain the plaintiffs from withholding consent was declined, and the existing contractual and creditor priority position remained undisturbed.

Ratio Decidendi: A mandatory interlocutory injunction will not be granted where it does not restore status quo ante, does not arise from the plaintiff's cause of action or an incidental right, and would override express contractual and secured-creditor rights.

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