PANNALAL BHANSALI versus BHARTI TELECOM LIMITED & ORS.

Citation: [2026] 3 S.C.R. 493 · Decided: 10-03-2026 · Supreme Court of India · Bench: SANJAY KUMAR · Disposal: Dismissed

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Judgment (excerpt)

[2026] 3 S.C.R. 493 : 2026 INSC 213
Pannalal Bhansali 
v. 
Bharti Telecom Limited & Ors.
(Civil Appeal No. 7655 of 2025)
10 March 2026
[Sanjay Kumar and K. Vinod Chandran,* JJ.]
Issue for Consideration
Issue arose whether the reduction of share capital u/s.66 of the 
Companies Act, 2013, and the consequent forced exit of minority 
shareholders, was arbitrary and unfair.
Headnotes†
Companies Act, 2013 – s.66 – Reduction of share capital – 
Appellants-minority public shareholders in the respondent 
company, held a fraction of 1.09% of shares – Respondent 
no.1 decided to reduce its share capital u/s.66, by cancelling 
28,457,840 equity shares held by the minority shareholders and 
paying them an exit price of Rs.163.25 per share which was 
subsequently raised to Rs.196.80 per share by the NCLT – Said 
reduction approved by 99.9% of total shareholders – Minority 
shareholders including appellants filed appeal challenging the 
same on the ground that the explanatory note of the General 
Meeting was a tricky notice to mislead them because it did 
not include the actual valuation reports, and valuation was 
done by an internal auditor – Correctness:
Held: Notice not vitiated by non-disclosure or mis-disclosure merely 
for reason of the valuation and fairness report not being placed 
before the shareholders as there was no statutory mandate for a 
valuation report for the reduction of a share capital – Valuation in the 
process of reduction of capital was resorted to by the company only 
to arrive at a fair value and the fair value arrived, after the deduction 
of tax was disclosed in the notice and the method adopted itself 
was kept open for verification by the identified shareholders at the 
registered office – It was disclosed fully in the proceedings before the 
NCLT where the investors objected, despite the special resolution 
having been passed with a thumping majority – Reduction of share 
capital can be achieved by a special resolution and confirmation 
* Author
494
[2026] 3 S.C.R.
Supreme Court Reports
by the tribunal, without a report of valuation from an approved/
registered valuer and hence, it does not fall within the ambit of a 
relevant material; without the full and complete disclosure of which 
the reduction of capital cannot be acted upon – However, company 
despite any legal requirement adopted a valuation exercise, which 
was further affirmed in a fairness evaluation by a different agency, 
both of which reports were retained in the Registered Office of the 
Company, kept open for verification by the investors – Thus, no 
procedural infraction or misleading disclosure to style the notice 
as ‘tricky notice’ – Notice contains the full disclosure as required 
in a measure employed for reduction of share capital u/s.66, which 
is the price offered by the company which translates as an exit 
option for the identified shareholder – Furthermore, appointment 
as an internal auditor, does not bring in a bias with respect to 
the activities of the company which would essentially go against 
the scope and spirit of an audit carried out of the accounts of 
the company as an inhouse verification, which is also a statutory 
requirement, available for scrutiny before a statutory auditor – 
Not even a probability found that the internal auditor would act 
in a biased manner, leave alone the valuation agency which is 
an affiliate of the former – Plea that arbitrarily and without legal 
sanction, the method of Discount for Lack of Marketability-DLOM 
was applied to further reduce the value of share, cannot be 
accepted – Applicability of DLOM cannot be held invalid and in 
any event, what has to be looked at by the tribunal in scrutinising 
the scheme of reduction of capital is only as to whether there was 
a fair measure employed which cannot be termed unreasonable 
or prejudicial to the individual shareholders – Fair and reasonable 
value was offered to the minority shareholders and the majority 
of the identified shareholders present and voting, voted in favour 
of the resolution – Even on a microscopic scrutiny the valuation 
cannot be found to be egregiously wrong especially looking at the 
previous offers and also the rights issue offered at par, prior to 
the reduction of share capital, exponentially increasing the take 
aways of the individual shareholders and the valuation cannot at 
all be said to have gone off-track, so as to make it egregiously 
wrong – Appellants were seasoned retail investors who made a 

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