The Supreme Court of India has upheld the reduction of share capital undertaken by Bharti Telecom Limited (BTL), ruling that courts will not interfere in such corporate decisions merely because minority shareholders dispute the valuation of shares offered as an exit price. 

The bench of Justice Sanjay Kumar and Justice K. Vinod Chandran has dismissed appeals filed by minority investors who challenged the buyout price determined during the capital reduction process.

The dispute arose from BTL’s decision to reduce its share capital by cancelling over 28 million equity shares held by minority shareholders and offering them an exit price of ₹163.25 per share. Minority shareholders opposed the move, claiming that the valuation was artificially lowered and that they were being forced out of the company at an unfair price.

The shareholders argued that the process suffered from procedural defects and that the valuation methodology adopted by the company’s valuer was flawed. They also alleged that key valuation documents were not adequately disclosed prior to the shareholders’ meeting that approved the reduction of capital. According to them, these lapses made the scheme unfair and oppressive to minority shareholders.

However, the Supreme Court rejected these claims and found that the company had complied with the requirements of Section 66 of the Companies Act, 2013, which governs reduction of share capital. The Court observed that the law does not mandate the preparation or circulation of a valuation report for capital reduction. Nevertheless, BTL had voluntarily obtained a valuation report and fairness opinion and made them available for inspection before the shareholders’ meeting. 

The Court also noted that the special resolution approving the capital reduction received overwhelming support from shareholders. More than 99.9% of the shareholders who voted supported the proposal, including a substantial majority of minority shareholders themselves. This level of approval, the Court held, indicated that the decision was neither arbitrary nor oppressive. 

A key issue before the Court was the application of the Discount for Lack of Marketability (DLOM) while valuing BTL’s shares. The minority investors argued that the discount significantly reduced the exit price. The Supreme Court, however, upheld the valuation approach, noting that the company’s shares were unlisted and therefore less liquid than shares traded on stock exchanges. Applying a marketability discount in such circumstances was consistent with accepted valuation principles. 

The Court further rejected allegations of bias against the valuer, holding that mere professional association with other entities connected to the company does not establish a conflict of interest. It also emphasised that the valuation had been independently reviewed and accepted during the tribunal proceedings.

Highlighting the limited scope of its jurisdiction under Section 423 of the Companies Act, the Supreme Court noted that it can interfere only when substantial questions of law arise. Since both the National Company Law Tribunal (NCLT)and the National Company Law Appellate Tribunal (NCLAT) had already examined the facts and upheld the scheme, the Court found no grounds to overturn their concurrent findings.

Case Details

Case Title: Pannalal Bhansali Versus Bharti Telecom Limited & Ors.

Citation: JURISHOUR-294-SC-2026

Case No.: Civil Appeal No. 7655 of 2025

Date: 10/03/2026

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