Eleven minority public shareholders — holding a combined fraction of 1.09% of Bharti Telecom Limited (BTL) — challenged the company's reduction of share capital under Section 66 of the Companies Act, 2013, by which 28,457,840 equity shares held by identified individual investors were cancelled and an exit price of Rs.163.25 per share (subsequently raised by the NCLT to Rs.196.80) was paid. The special resolution was passed by 99.90% of total shareholders and 76.35% of the identified shareholders present and voting. Both the NCLT and the NCLAT upheld the reduction; the appellants came before the Supreme Court in Civil Appeal No. 7655 of 2025 and connected matters.
The Court dismissed all appeals. On the procedural challenge — that the notice of the extraordinary general meeting was a "tricky notice" for not enclosing the valuation and fairness reports — the Court held that Section 66 imposes no statutory mandate for a valuation report; such a report is required under Sections 62(1)(c), 230, 232 and 236, but conspicuously omitted from Section 66. Since the valuation was not "relevant material" within the meaning of the tricky-notice doctrine (traced from Kaye v. Croydon Tramways & Co. Ltd. and Baillie v. Oriental Telephone and Electric Co. Ltd.), its non-enclosure did not vitiate the notice. The fair value arrived at and the method adopted were disclosed in the notice; the full reports were available for inspection at the Registered Office and were in fact inspected by at least one investor's advocate.
On the allegation of a biased valuer — the valuation agency being an affiliate of BTL's internal auditor — the Court applied N.K. Bajpai v. Union of India to hold that bias must be demonstrably real and present; not even a probability of bias was established. The internal auditor's independence is mandated by statute and ICAI guidelines, and the valuation was separately affirmed as fair by an unrelated agency, and further confirmed by ICICI Securities and SBI Caps Securities at the Custodian's request.
On the application of Discount for Lack of Marketability (DLOM), the Court distinguished Kiri Industries Ltd. v. Senda International Capital Ltd. (Singapore Court of Appeal), which declined DLOM only in a court-ordered oppression buyout on its specific facts, not as a universal principle. BTL's shares were delisted, paid no dividends, and had zero marketability; DLOM is expressly recognised under ICAI Valuation Standard 103 and is consistent with Ind AS 113's market-based fair value measurement. The Court applied the four-limb test from In Re: Cadbury India Limited and found all limbs satisfied — fair and reasonable value offered, majority of identified shareholders voted in favour, no egregious error in valuation, and the valuer had not gone off-track. The jurisdictional challenge to the NCLAT Bench (two Technical Members, one Judicial Member) was also rejected: Section 418A of the Companies Act, 2013 requires only one Judicial Member in a two-member Bench, and the 2010 Madras Bar Association direction applied to the pre-2013 statutory scheme.