| Case ID |
1023ee94-d219-46ab-a643-a08166060bf1 |
| Body |
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| Case Number |
Suit No. 1373 of 2013 |
| Decision Date |
Jun 05, 2015 |
| Hearing Date |
|
| Decision |
The court dismissed the application for interim relief, concluding that the plaintiffs, being minority shareholders, failed to demonstrate a case of fraud or loss suffered by Clariant Pakistan. The court found that the assets were sold at a premium above the fair market value. The ruling emphasized that the exception to the rule in Foss v. Harbottle could not be invoked in favor of the plaintiffs since there was no evidence of wrongdoing that would justify a derivative action on behalf of the company. The decision reinforced the principle that the proper plaintiff in cases involving corporate wrongs is the corporation itself, not individual shareholders unless exceptional circumstances arise. |
| Summary |
In the case of Suit No. 1373 of 2013, heard by the Sindh High Court, the plaintiffs, minority shareholders of Clariant Pakistan, alleged that a fraudulent transaction occurred when the company transferred its valuable assets to a related entity, Clariant Chemical Pakistan, at a substantial discount. The plaintiffs argued that this was a breach of their rights and sought interim relief based on the exception to the rule in Foss v. Harbottle. The court examined the details of the transaction, including the fair market value of the assets involved, which the defendants claimed were sold at a premium. The judge ruled that the plaintiffs did not establish a prima facie case of fraud or loss, leading to a dismissal of their application for interim relief. This case highlights important corporate governance principles and the balance of power between minority shareholders and controlling entities. Keywords: derivative action, corporate fraud, minority shareholders, interim relief, corporate governance. |
| Court |
Sindh High Court
|
| Entities Involved |
SK Capital,
GOLDEN ARROW SELECTED STOCK FUNDS LTD.,
CLARIANT PAKISTAN LIMITED,
CLARIANT INTERNATIONAL,
CLARIANT CHEMICAL PAKISTAN
|
| Judges |
MUNIB AKHTAR, J
|
| Lawyers |
Murtaza Wahab,
Mayhar Mustafa Kazi,
Omer Soomro,
Zohaib Ahmed
|
| Petitioners |
,
GOLDEN ARROW SELECTED STOCK FUNDS LTD.
|
| Respondents |
Defendant No. 2,
Defendant No. 3,
Defendant No. 4,
Defendant No. 5,
Defendant No. 6,
Defendant No. 7,
Defendant No. 8,
CLARIANT PAKISTAN LIMITED,
Defendant No. 9
|
| Citations |
2016 SLD 351,
2016 CLD 158
|
| Other Citations |
Daniels v. Daniels [1978] 2 WLR 73,
Konamaneni and others v. Rolls Royce Industrial Power (India) Ltd. [2002 1 All ER 979,
Prakashchandra Rajmal Jain v. Firm Swarupchand Hukumchand and Co. [1975 MPLJ 390,
Spectrum Technologies USA Inc. v. Spectrum Power Generation Company Ltd. (Delhi High Court, dated 21-09-2001),
Nirad Amilal Mehta v. Genelec Limited and others [2008] 146 Comp. Cas 481,
Prudential Assurance Co. Ltd. v. Newman Industries Ltd and others (No.2) [1980] 2 All ER 841,
North-West Transportation Company Ltd. and another v. Henry Beatty and others (1887) 12 App. Cas. 589,
Muhammad Suleman Kanjiani and others v. Dadex Eternet Ltd. and others 2009 CLD 1687,
Pfizer Laboratories Ltd. v. Parke Davis and Co. Ltd. 2007 CLD 1047,
In re: Kohinoor Raiwind Mills Ltd. and others 2002 CLD 1747,
Kohinoor Raiwind Mills Ltd. v. Kohinoor Gujar Khan Mills and others 2002 CLD 1314
|
| Laws Involved |
Civil Procedure Code (V of 1908)
|
| Sections |
O. XXXIX, Rr. 1 & 2
|