RAILTRACK'S shareholders have voted to approve the company's rescue plan, investors were told at an extraordinary general meeting in London yesterday.

Private shareholders at the meeting had made clear their anger at the proposed deal, which will see in-administration Railtrack plc sold off to a not-for-profit new company Network Rail, for £500m.

The deal means the shareholders are expected to get about 245p to 255p a share.

The Railtrack Private Shareholders Action Group believes Railtrack is worth far more than £500m.

But in figures disclosed at the end of the emotional three-hour meeting it became clear that postal voting carried out already meant the proposal would go ahead.

In the postal voting, 276,439,336 shares were in favour of the proposal, and 9,267,531 against.

It meant angry shareholders voting in person yesterday could not affect the outcome, which will also see Railtrack selling its interest in the Channel Tunnel Rail Link to the London & Continental Railways company for £375m.

It had been expected that private shareholders would be heavily outvoted by major institutional shareholders who own more than 80 per cent of the 519 million shares in Railtrack and were known to be backing the deal.

Railtrack chief executive David Harding said he believed there was a clear basis for a claim against the Government.

He said: "The Government acted improperly in putting Railtrack plc into administration. There's no doubt in my mind that the company was not insolvent on October 5."

But with litigation, there was always uncertainty, and people must be realistic, he added, stating the board could not recommend litigation.

One private shareholder described the offer as "derisory" and another said the board had let shareholders down.

Afterwards, Andrew Chalklen, chairman of the Railtrack Private Shareholders Action Group, said: "It's gone through, I'm not totally surprised, because it was always dependent on the institutional vote. But I'm quite encouraged by the number of shares against. A lot of individuals voted against.

"Now we go back to the shareholders and say this is not the end of the story, we can take legal action against the Government for misfeasance in public office, abuse of power.

"We will say to the shareholders, you will receive some money in January, can you contribute a small amount of it, a few pence per share, so we can carry on the action? I think a judge could award more than 280p a share in damages.