Interim relief is not maintainable unless granted in aid of the main relief claimed in a suit.

The respondents (plaintiffs) invested ₹1 Crore in "C-class" redeemable preference shares of the appellant bank in 1998.

Upon maturity in 2004, the bank failed to redeem the shares at face value due to financial distress.

In 2010, the bank held its 13th Annual General Meeting (AGM) where a special resolution was passed to redeem all preference shares at 20% of their face value as full settlement.

The respondents challenged this resolution in CS No. 324 of 2013, alleging violations of Section 106 of the Companies Act, 1956.

A Single Judge initially directed the bank to set apart ₹2 Crores to satisfy the potential claim.

By the impugned order dated November 21, 2016, the Single Judge confirmed this interim arrangement, holding the 13th AGM resolution illegal for lack of explanatory notes and failure to prove 75% consent from the specific "C-class".

The bank appealed this order.

1. Whether the alteration of rights of preference shareholders at the 13th AGM was in compliance with Section 106 of the Companies Act, 1956.

2. Whether an interim relief (restraining the use of assets/liquidation) can be granted if it is not in aid of the final reliefs sought in the main suit.

3. Whether the prior interlocutory orders in the same proceedings operated as res judicata for the current appeal.

The court primarily applied Section 106 of the Companies Act, 1956, which allows variation of class rights with written consent of 75% of that class or a special resolution at a separate meeting.

It relied on Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1996) and Mather and Platt Fire System Ltd., In re (2007) to establish that if identical terms are offered to a homogenous group, a separate meeting for a "sub-class" is not required.

Regarding interim orders, the court applied the principle from State of West Bengal v. Pranjiban Dey (1975) and Sri Milon Roy Chowdhury v. Ashish Kumar Saha (2018), which dictates that interim relief must be auxiliary to and in aid of the main relief claimed in the suit.

The Court found that the appellant bank had indeed served notice with an explanatory statement regarding the redemption at 20% value.

The evidence established that 99.1% of the total preference shareholders had consented in writing to the variation, satisfying the 75% threshold required under Section 106.

The Court rejected the respondents' argument that a separate meeting exclusively for "C-class" holders was mandatory, reasoning that all preference shareholders formed a homogenous class receiving the same offer.

Furthermore, the Court observed that the interim injunction sought (restraining alienation of assets) was not auxiliary to the main suit’s prayer (declaring the AGM resolution void).

Finally, the Court clarified that since the previous appellate order had explicitly kept all issues open for decision by the Single Judge, the principle of res judicata did not apply.

The Court held that the 13th AGM resolution was prima facie valid under Section 106 of the Companies Act, 1956, as the requisite 75% consent had been obtained.

It further held that the interim relief granted by the Single Judge was improper as it was not in aid of the substantial reliefs claimed in the suit.

The appellant bank is no longer required to set apart the ₹2 Crores as previously directed.