Interim restraint on a rights issue failed where company funding needs and equal participation terms outweighed the requested freeze.

An interim restraint on a rights issue in an oppression and mismanagement petition under sections 241 and 242 of the Companies Act, 2013 was sought, but the Tribunal applied the settled interim-relief test of prima facie case and balance of convenience. It considered that the company was a private limited company, the loans from friends and relatives were undisputed, funding was needed for business and repayment obligations, and the petitioners had been offered participation in the rights issue on the same terms. On those facts, the company's financing requirements prevailed, so interim stay of the rights issue was refused.

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Issues: Whether interim stay of the rights issue should be granted in a petition alleging oppression and mismanagement.

Analysis: The petition sought interim restraint on the rights issue pending adjudication of the substantive petition under sections 241 and 242 of the Companies Act, 2013. The Tribunal applied the settled test for interim relief, namely whether the applicant had made out a prima facie case and whether the balance of convenience justified interference. It noted that the company was a private limited company, that the loans raised from friends and relatives were not disputed, that the company required funds for its business and repayment obligations, and that the petitioners had been offered participation in the rights issue on the same terms. On these facts, the Tribunal found that the company's interest and the need for funds outweighed the request to freeze the issue at the interim stage.

Conclusion: Interim stay of the rights issue was not warranted and the request for interim relief was rejected.

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