Nigel Watts, a thorn in the side of the company since it refused to pay out on his late brother-in-law's life policy, had gone to the meeting in the City last September to repeat his often-asked question whether a pounds 530,000 loan to former Sun Alliance chairman, Lord Aldington, had been recalled.
Sir Christopher Benson, the chairman, refused to answer and by a majority vote Mr Watts was asked to leave. When he refused, he was arrested for breach of the peace. He told the court that he was handcuffed, marched out and bundled into a police van.
He had handed his tape recorder to another shareholder who had captured the whole incident. Jonathan Crystal, counsel for Mr Watts, told the jury the tape showed the officers' notebook entry was 'clearly not true'.
Mr Watts had remained calm throughout the incident and there were no grounds for arresting him, he said. The tape showed the police officer made up words.
Mr Watts, 56, of Tunbridge Wells, Kent, is seeking damages for injury to his feelings and damage to his reputation, plus aggravated damages. The police are contesting the action.
Mr Crystal said that 20 years ago his client's brother-in-law had died in a fall. The final decision to reject the claim was taken by Lord Aldington, then chairman.
In 1984, Mr Watts was persuaded by the historian, Count Nikolai Tolstoy, that during the war Lord Aldington had been involved in sending Cossacks to their certain deaths.
Lord Aldington retired in 1985. Two years later Count Tolstoy and Mr Watts published a leaflet about his war conduct. That resulted in 1989 in a record pounds 1.5m libel award against the pair. 'Sun Alliance . . . provided over pounds 500,000 to an ex- employee to enable him to bring libel proceedings relating, not to his conduct as chairman, but to his conduct over 40 years earlier. The legality of that loan is at best dubious and I would suggest it was immoral,' Mr Crystal said.
Last September, Mr Watts had attended an extraordinary general meeting at which shareholders were asked to consider raising pounds 300m. Mr Watts considered part of that could be raised by recovering the Aldington loan, he said.
The case continues today.