Minority shareholder injunctions in corporate restructurings require proof of ultra vires conduct, fraud, or abuse of majority power.

A minority shareholder seeking to restrain a proposed inter-bank arrangement had to show that the transaction was ultra vires, fraudulent, or an abuse of majority power. The Court found the scheme-transferring deposits and liabilities against assets of equivalent value-was within the company's corporate powers, capable of shareholder approval, and not proved on the record to involve fraud, undervalue, or infringement of depositor rights. The balance of convenience also favoured discharge of the ad interim injunction. Separately, the suit was transferred to the High Court for trial because the parties agreed and the circumstances justified transfer.

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Issues: (i) Whether the proposed arrangement between the two banks was ultra vires, illegal, or fraudulent so as to justify a temporary injunction at the instance of a minority shareholder; (ii) whether the suit should be transferred to the High Court for trial.

Issue (i): Whether the proposed arrangement between the two banks was ultra vires, illegal, or fraudulent so as to justify a temporary injunction at the instance of a minority shareholder.

Analysis: The arrangement contemplated the transfer of deposits and liabilities to the transferee bank against transfer of assets of equivalent value. The Court held that the company's memorandum and articles, together with the relevant banking powers, permitted disposal of assets and undertaking in substance, and that the transaction was capable of approval by the shareholders. The allegations of control by an interested shareholder and of transfer of assets at undervalue were not proved on the material before the Court. The Court also held that the relationship between bank and depositor was that of debtor and creditor, so the proposed scheme did not, on that showing, infringe depositor rights. Applying the principles governing minority suits, the Court found no established fraud, no proved abuse of majority power, and no sufficient basis to continue the ad interim injunction. The balance of convenience was also found to favour discharge.

Conclusion: The proposed scheme was not shown to be ultra vires or fraudulent, and the temporary injunction was discharged.

Issue (ii): Whether the suit should be transferred to the High Court for trial.

Analysis: The connected circumstances and the agreement of the parties justified transfer, and the record was already before the High Court. No reason was found to keep the matter in the subordinate court.

Conclusion: The suit was ordered to be transferred to the High Court for trial.

Final Conclusion: The injunction application failed, but the suit was transferred to the High Court, so the matter was only partly successful for the petitioner overall.

Ratio Decidendi: A minority shareholder cannot restrain a company transaction merely on allegation; relief lies only where the act is proved to be ultra vires, fraudulent, or an abuse of majority power, and a transaction within corporate powers and capable of shareholder approval will not ordinarily be interdicted in equity.

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