TaxTMI 
TaxTMI 
2014 (5) TMI 1189
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...., I summarize very broadly the controversy and my conclusions. (b) The relevant facts are set out in Section 2. (c) Section 3 contains a summary of the objections, principally those of one set of objectors, Ms Malati Samant (the "Samant Group") and Mr. Alok Churiwala (the "Churiwala Group"), who presented their objections together. (d) In Section 4, I have considered the statutory provisions and various authorities cited. (e) In Section 5, I consider the objectors' submissions in somewhat greater detail. References to the Samant Group should be read to include the Churiwala Group as well. In this section, I have also dealt with the objections of the third group, the Deepak Gidwani Group (the "Gidwani Group"), separately represented. (f) Section 6 contains a brief analysis of the two court-ordered valuation reports and about the two rival valuation methods in question. (g) In Section 7, having considered the rival submissions and the case law cited, I have attempted to cull out guiding and defining principles in matters such as these. (h) Finally, Section 8 sets out my conclusions. Throughout, paragraph numbering ....
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....ok undue advantage, and perhaps even abused, this liberty. A first set of written submissions was sought to be tendered. Counsel for Cadbury India mentioned the matter on 10th March 2014, objecting and saying that this set of written submissions from the Samant group contained new and additional material never argued before the Court. I orally directed the Samant group to reconsider its written submissions. On 13th March 2014, an entirely new set of written arguments was presented. The second set retained all the new material in the first, and added to it. A very large volume of authorities was also submitted, although during the oral arguments only one authority was actually cited before me. 1.5. What came in from the Samant Group was a lengthy, rambling, 52-page disquisition. The length itself is of no moment. What is distressing, however, is that this treatise contains material not once urged in court; material that, had it been placed during a hearing, I might have had an opportunity to test, and on which to hear the other side. This new material is not limited to a citation of precedents and authorities either. It contains entirely new submissions on facts. Whatever m....
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....precated. No words are sufficient for the excoriation such conduct merits. Let there be no mistake: the linguistic restraints we impose on ourselves in our decisions is no weakness, nor an indication of unwonted indulgence, benevolence or indulgence in such situations. It is merely a refusal by a court to let itself be pulled into the same mire. 1.8. But no party should have to suffer, or have his cause left unheard, because of the ill-advised and immoderate conduct of its chosen advocate. I have, therefore, given the objectors latitude that I do not believe they have earned or that they deserve. As the reasons that follow will make it clear, even this additional and extra material does not in any way assist the objectors in the Samant group. 1.9. I attempted to cut through the bramble of invective and accusation to discern, if I might, a legal basis for the opposition. I found none. At its heart, the submission of the Samant Group, from the first the most vociferous and now, effectively, the only remaining opponent of Cadbury India's scheme, was merely this: that a Court must, as a matter of law, take on itself the burden of a microscopic examination of an ac....
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....bai 400 026. This is a property at the junction of Bhulabhai Desai Road and Gopalrao Deshmukh Road (Peddar Road) opposite the Mahalaxmi Temple. This property has, it seems, recently been sold. I mention this only because one of the objections (repeatedly) taken to this petition is that the sale price of this transaction is not reflected in the share valuation of Cadbury India. 2.3. While the objects for which Cadbury India was incorporated have been set out in petition, these are not material for our purposes. It is enough to acknowledge that Cadbury India is a well known manufacturer and purveyor of chocolates, milk food drinks (hot chocolate, malted drinks, cocoa mixes), confectionery and similar products. 2.4. As on 31st December 2008, the authorised share capital of Cadbury India was Rs. 37.50 crores, divided into of 3.75 crore equity shares of Rs. 10/- each. As on that date, the issued share capital of Cadbury India was Rs. 32,18,57,210/- divided into 3,21,85,721 equity shares of Rs. 10/- each. The subscribed share capital was Rs. 32,18,32,080/- divided into 3,21,83,208 equity shares of Rs. 10/- each. 2.5. On the date of the petition the issued share....
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....ffers. The details of some of these are listed below. 2.9. On 18th January 2002, Cadbury Plc, Cadbury Mauritius and Cadbury Schweppes made an open offer under the relevant SEBI regulations of 1997 to Cadbury India's public shareholders. The offer was to acquire 49% of the paid up capital of Cadbury India as on 18th January 2002 at a price of Rs. 500/- per equity share. The offer opened on 24th January 2002 and closed on 22nd February 2002. The Cadbury Group acquired 39.24% of the paid up equity share capital of Cadbury India in this manner. 2.10. The shares held by the Cadbury Group were thus more than 90% of Cadbury India's share capital. Therefore, another offer was made by the Cadbury Group to purchase 9.76% of the remaining public share holding of Cadbury India as on 13th May 2002 at the same offer price of Rs. 500/- per equity share. This offer remained open from 20th May 2002 to 19th November 2002. As a result of this offer, the Cadbury Group's collective equity stake in Cadbury India rose to 93.47%. 2.11. It was at this stage that the public share holding in Cadbury India fell to less than 10% of the outstanding equity share capital. Ca....
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....the shares of Cadbury India at Rs. 1,340/- per fully paid up equity share. On the basis of these valuations, and on the footing that no adverse impact was anticipated to Cadbury India's financial position, on 16th October 2009 Cadbury India gave notice of an extraordinary general meeting to its shareholders. That meeting was scheduled on 16th November 2009 at 2.00 p.m. A copy of that notice and its explanatory statements are annexed to the petition. The meeting was called to consider, and, if thought fit, to approve, with or without modification, a special resolution for the reduction of equity share capital of Cadbury India. 85 members attended the meeting. Eight proxies representing 134 shares were registered. Two letters of representation from corporates holding 3,03,18,433 equity shares of Rs. 10/- each were also filed. The special resolution was duly proposed and seconded. Comments were invited from those attending. The questions raised in response to that invitation were answered. The special resolution was put to vote by a poll. It was approved by the necessary majority of equity shareholders as a special resolution. In sum, a total of 3,03,31,248 votes were polled. Of t....
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.... to hand over all the material that they had relied on in a sealed cover to E & Y. The objectors before the Court were also allowed to submit their objections to E & Y within two weeks. Paragraph 3(vii) of the order specifically noted that the E & Y valuation, to be submitted in a sealed cover within six weeks, was to be finally binding on all objectors and shareholders subject to the one caveat that I have noted. 2.23. E & Y submitted its report dated 20th May 2010 ("the first E & Y report"). It adopted the Comparable Companies Multiples ("CCM") method of valuation, and returned a value of Rs. 1,743/- per fully paid up equity share. For several months thereafter the matter was adjourned for a variety of reasons. On 8th July 2011 the order of 15th April 2010 was modified. E & Y was directed to update its valuation report dated 20th May 2010 taking into account the valuation of the Company based on the Discounted Cash Flow ("DCF") method as also on the CCM method to reflect a valuation as on 30th September 2009. This report, ("the second E & Y report") was to be submitted to Court on 29th July 2011. That report was submitted as directed, with a valuation of Rs. 2,014.50 per....
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....the demand now made may seem trivial in the context of the miniscule shareholding of these two objectors' groups. Yet it must be remembered that 99.96% of votes at the extraordinary general meeting were in favour of the resolution for deduction in capital. This 99.96% represents 3,03,18,464 shares, i.e., more than three crore shares. Therefore, even the marginal difference claimed by the objectors is very likely to have a severely damaging and perhaps even catastrophic effect on Cadbury India's financials. SECTION 3: SUMMARY OF THE SAMANT GROUP'S OBJECTIONS 3.1. At the broadest level, the submissions of the Samant Group were to this effect: 3.1.1. That Cadbury India withheld its financial and business projections from E & Y. These are crucial to a valuation of share on the DCF method; 3.1.2. That the date of 31st July 2009 was taken as the appointed date only because the P/E ratio was demonstrably lower than at 30th September 2009. This resulted in Cadbury India denying its shareholders that which was just and fair; 3.1.3. That following the CCM method, the valuation as on 30th September 2009 was Rs. 1,878/- per share. On 31st July....
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.... depressed; 3.2.7. That Cadbury India's conduct inspires no confidence; 3.2.8. That Cadbury India's shares have been deliberately undervalued; and 3.2.9. Submissions in relation to what ought to be the approach of a Court in matters like these. 3.3. Also at this general level, the submissions of Mr. Dwarkadas, learned Senior Counsel on behalf of Cadbury India, are that it is not possible for the objectors to now try and take into account subsequent events, and to do so constantly. It is also not possible to draw comparisons with other companies not similarly situated. There would be no question of a control premium being taken into account as this is not a case of any control of the company being passed to any person. 3.4. Paragraphs 3, 4A, 4B, 5, 6(c), 6(e), 6(f), 7(c), 7(d), 7(e), 8, 9, 10, 12(f), (h), (i) and 13 of the Samant Group's 52-page written submissions are all new. They were never argued. In Court, the Samant Group relied on a single judgment, i.e., Dr. Mrs. Renuka Datla vs. Solvay Pharmaceutical B.V. & Ors. AIR 2004 SC 321 Along with its written submissions, the Samant Group tendered a compilation of some 11 addi....
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.... to non-promoter equity shareholders (the price of Rs. 850/- per share) and this was much higher than the book value of the shares at the relevant time. After noting the rival submissions, the Division Bench held that it is permissible for a company applying under Section 100 to reduce its share capital in any way. In that case too, as in the present case, there was no argument that the special resolution at the extraordinary general meeting was invalidated for any reason or that did not comply with the statutorily mandated procedure. There was also no argument that the articles of association prohibited such a share capital reduction. The issue before the Court was whether the proposed scheme had the effect of wiping out entirely a class of shareholders, namely, the non-promoter shareholders, though on payment of certain compensation. 4.4. The Sandvik Division Bench held itself to be bound by the decision of the Supreme Court in Ramesh B. Desai & Ors. vs. Bipin Vadilal Mehta & Ors.: (2006) 5 SCC 638, paragraph 11 In paragraph 9 of Sandvik, the Division Bench held: 9. In our opinion, the above quoted observations of the House of Lords from its judgment in the case....
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.... and Finance Corporation Vs. Couper, 1894 AC 399 has also been referred to as a leading authority on the subject.... 4.6. The Division Bench in Sandvik held that the Supreme Court decision in Ramesh B. Desai was on point and binding. The appeal was allowed. 4.7. Carefully read, these decisions seem to me to suggest that before a Court can decline sanction to a scheme on account of a valuation, an objector to the scheme must first show that the valuation is ex-facie unreasonable, i.e., so unreasonable that it cannot on the face of it be accepted; alternatively, that it is discriminatory; or that it has not been approved by a sufficient majority or, at a minimum, that a substantial number or percentage voted against it at an extraordinary general meeting. None of these are demonstrated in the present case. What the Samant Group suggests is, quite simply, that there are other possible methods of valuing Cadbury India's shares; that the present values are not to their liking; that it matters not that they constitute a miniscule fraction of the non-promoter shareholders, and, too, a very small percentage of those who voted against; and that it is entirely irrelevan....
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....re must mean something more than just receiving less than what a particular shareholder may desire in an ideal world. It does not mean merely a lower rate-per-share than the shareholder wants. It means a deliberate and studied attempt to force a class of shareholders to divest themselves of their holding at a rate far below what is reasonable, fair and just. One test of such reasonableness might be to consider the rate of any past open offers, extinguishments or buy-backs. Are these rates much higher than the one now proposed? Does the present valuation posit a rate that is so egregiously low that a shareholder might receive a mere pittance? 4.9. The section plainly says a company may reduce its capital "in any way". In the Sandvik appeal, it was argued that the legislative mandate is "directed towards preventing the forced acquisition of shares of the public or the extinguishment of the entire class of public shareholding" by use of the "brute force" of the promoter majority shareholding. But what if the majority is that of the non-promoters? The binding decision of the Division Bench in Sandvik deals with precisely this situation when it says that: ... once it i....
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....etween a company and its members or any class of them. Such a compromise would also take in its sweep any scheme of amalgamation/merger of one company with another. When such a scheme is put forward by a company for the sanction of the Court in the first instance the Court has to direct holding of meetings of creditors or class of creditors or members or class of members who are concerned with such a scheme and once the majority in number representing three-fourths in value of creditors or class of creditors or members or class of members, as the case may be, present or voting either in person or by proxy at such a meeting accord their approval to any compromise or arrangement thus put to vote, and once such compromise is sanctioned by the Court, it would be binding to all creditors or class of creditors or members or class of members, as the case may be, which would also necessarily mean that even to dissenting creditors or class of creditors or dissenting members or class of members such sanctioned scheme would remain binding. Before sanctioning such a scheme even though approved by a majority of the concerned creditors or members the Court has to be satisfied that the company or....
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....It is, of course, true that so far as the Company Court is concerned as per the statutory provisions of Sections 391 and 393 of the Act the question of voidability of the scheme will have to be judged subject to the rider that a scheme sanctioned by majority will remain binding to a dissenting minority of creditors or members, as the case may be, even though they have not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme. It can be postulated that even in case of such a Scheme of Compromise and Arrangement put up for sanction of a Company Court it will have to be seen whether the proposed scheme is lawful and just and fair to the whole class of creditors or members including the dissenting minority to whom it is offered for approval and which has been approved by such class of persons with requisite majority vote. (Emphasis supplied) 4.13. What Mr. Samant overlooks is the next paragraph, 28A, in Miheer H. Mafatlal: -A. However further question remains whether the Court has jurisdiction like an appellate authority to minutely scrutinize the scheme and to arrive at an independent conclusion whether the ....
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....contrary: it elucidates certain fundamental principles, the first of which is that to upset a valuation, a wrong approach must be demonstrated clearly and unequivocally. A plausible rationale provided by the valuer is not be readily discarded merely because an objector has a different point of view. What is to be borne in mind is that as a result of Court-ordered valuation, the objectors today have a significantly higher valuation than originally proposed. Cadbury India has not challenged the Court-ordered valuation. It has accepted it. Whether the increase is due to altered parameters and considerations or different methodologies makes little difference. Indeed I would venture to suggest that the Samant Group has, in a manner of speaking, run itself onto its own sword. Every single one of the charges that it levels against the E & Y reports could conceivably be levelled by Cadbury India against the report that the Samant Group claims to have independently obtained. 4.16. In its compilation of judgments the objectors have report to the following decisions never cited in Court. The Petitioners' counsel had no opportunity to deal with the objectors' submissions on th....
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....pur Mills is actually against the objectors: the Court must test every scheme from the perspective of a reasonable and fair-minded person. Given its conduct, especially toward the Court, I do not think these are adjectives that I would use to describe the Samant Group. There is nothing before me to establish that the majority is acting dishonestly or without care or caution. The Court is not, in the words of the Gujarat High Court in Sidhpur Mills, a carping critic, a hair-splitting expert, a meticulous accountant or a fastidious counsel; the effort is not to emphasize the loopholes, technical mistakes and accounting errors. The perspective is to be that of the ordinary shareholder exercising his discretion in a reasonable and businesslike manner. 4.19. Casuistry, carping and caviling : these are not the court's guiding principles. Yet these are all apt descriptions of the Samant Group's objections. SECTION 5: THE OBJECTIONS 5.1. What is this unfairness or injustice of which the Samant Group complains so much? This is to be found in its reliance on a quotation from British American Trustee (supra) to the effect that once it is shown that the ob....
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....usiness includes other products such as infant foods, powdered milk, various dairy products, prepared dishes and cooking aids, nutrition products, condensed milk, and even coffee. All are absent from Cadbury India's operations and product mixes. Evidently, Nestle operates in a much broader spectrum of markets and products than Cadbury India. This is also true of companies in the Amul India group: Cadbury India does not vend milk, cheese, butter, yogurt or ice-cream. Therefore, merely because there is overlap in one segment of products, this does not necessarily be that the growth rates of all these companies should be taken to be the same, or should be extrapolated from one to the other. 5.4. Let us consider for a moment the fallibility of Samant Group's suggested price of Rs. 2,500/- per share. This is based not on any data or material pertaining to Cadbury India, but on the supposed market value of Nestle India Limited. The Samant Group's claim is that since on 19th January 2010, Nestle's shares were being traded at Rs. 2,542/- per share, Cadbury India's shares should be at least Rs. 2,500/-, for the two must be held to be "competitors". For the reaso....
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....ment or redevelopment of that property is predicated on several imponderables incapable of quantification. All that development is subject to development control rules; these change frequently. There may be other restrictions. It would require an entirely distinct set of metrics to evaluate the development potential of this property. Lastly, it is unclear how and in what manner the sale price of this immovable property or its development potential would possibly affect the break-up values or share valuations for Cadbury India. There is nothing, even in the written submissions, to affirmatively show that had the sale price been factored (and not the potential of shifting from Cadbury House), the valuation would have gone up sufficiently significantly to warrant a discarding of the second E & Y report. 5.7. The statement in at paragraph 3 of the Samant Group's written submissions as to the alleged lack of transparency in the valuation of shares has only to be stated to be rejected. I find it regrettable that any party, and even more so an advocate at our Bar, should choose to describe Court-ordered valuation reports thus: "colourable, suspicious and devoid of any transpa....
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....valuation report is demonstrated to be so unjust, so unreasonable and so unfair that it could result and result only in a manifest and demonstrable, inequity or injustice. This injustice must be shown to apply to a class. This has not been done. It always possible that there may be two views on any approach to accounting and valuation. In Re: German Remedies Ltd, [2005] 125 Com Cas 615. The fact that the objectors prefer one valuation or method, or prefer their own valuation, is no answer. The Samant Group is unable to demonstrate any such injustice or inequity. All that it says is that the values are not to its liking and that it believes that it is entitled to Rs. 2,500/- per share on the basis of a valuation that it has itself obtained. This is not a valid test in law. Indeed, I have very little doubt that had the Samant Group's valuation of Rs. 2,500/- per share been the result returned by E & Y, the Samant Group would undoubtedly had even found that to be "unfair, unjust and unreasonable". The unhappiness or disgruntlement of an individual or a group of individuals is not the measure by which a share valuation can ever be tested. 5.10. Take for instance the submis....
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.... 5.13. The next submission that the valuation has been depressed is again not one that lends itself to acceptance. Various grounds have taken under this head. These include that the terminal growth rate has been estimated at 6% while sales and profits are growing by 20% and 40%, respectively. Just as it is not possible to accept an extremely low figure, it is equally not possible to accept other, possibly inflated, figures. These might be transient or may depend on multiple variables. Moreover, a look at the second E & Y report indicates that this terminal growth rate of 6% is not a random figure plucked out of thin air. A rationale is supplied. This may or may not be to the Samant Group's liking, but it is certainly not without basis. The second E & Y report seems to indicate that E & Y compared future projections with past performance, and with the projections of comparable companies. It then arrived at an assumption of the terminal growth rate for the relevant period. It is important to notice that the projections by E & Y are across a very long time range. The terminal growth rate is one that is used for a period six years hence (eight or nine years from the date of t....
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.... out well beyond any reasonable life span. Indeed, I myself specifically dispensed with the presence of the representative of the Court appointed valuer on 13th February 2014 and I did so in open Court dictating an order in court and in the presence of all concerned, including the counsel for the Samant Group. Not once did anyone object. 5.17. There is a previous order dated 1st February 2013 (of Jamdar, J.) that notes that E & Y--submitted a letter in response to the query raised by the Court. The learned Counsel states that it was pursuant to the oral direction of the Court and pursuant to the explanation sought for by the Court. In view of the directions of the Court dated 8th July 2011, the said letter be kept in a sealed cover pending further orders of the Court. 5.18. This, presumably, is the infamous "white envelope". There is, among the court papers, an annexure by E & Y to its second report. This annexure is dated 14th March 2012, one year prior to the 1st February 2013 order. The annexure's cover sheet says that it contains Cadbury India's projections, along with relevant explanations from its management; and workings on the DCF method. This mate....
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....retionary jurisdiction under Section 100 of the Companies Act is not to entertain every fanciful wish or peevish complaint. It is to examine whether, on a standard or a test as detached and as objective as it is possible to be, a Court might plausibly conclude that a particular valuation is one that is, on the face of it, unreasonable, unjust and inequitable. 5.22. The submission that Cadbury India treats its shareholders badly, and that this is evidenced by its steady pay out of dividend at only 20% is one so entirely without merit that it is surprising that it should ever have been advanced. No shareholder was compelled to continue his or her holding while the shares of Cadbury India were freely traded. No shareholder has any statutory right to any particular dividend. This can have no possible bearing on the question of valuation either. 5.23. What the Samant Group overlooks is that it is not the only set of non-promoter shareholders, nor has it been sought to be ousted at the extraordinary general meeting by promoter shareholders. On the date of the extraordinary general meeting notice, 7,51,120 shares were held by persons other than the Cadbury Group, i.e., n....
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....o speak of the tyranny of a majority in general terms sans context. That implies that those with nothing to lose have somehow unleashed their collective will on those with everything to lose. It is another thing to ignore altogether the essential democratic discipline without which the functioning of any company would degenerate into mere chaos and anarchy. Here, the bulk of the non-promoter minority opted for the scheme. It is in this factual context that I must view Samant Group's shrill lamentations of unjust and inequity. 5.26. There is one final, telling factor: the 15th April 2010 order. Paragraph 3(vii) of that order says this: (vii) The valuation by the said Valuer shall be final and binding on all objectors and shareholders subject to the above caveat. That 'caveat' is to be found in paragraph 2: However, Mr. Dwarkadas submits that the said valuation should be treated as final and binding on the objectors and all shareholders of the Petitioner Company, who should not be allowed to pursue any of their objections thereafter. Mr. Dwarkadas submits that such an assurance is necessary to avoid the matter from getting delayed furth....
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.... India. That delay was partly attributable to the vicissitudes of litigation in this country. The matter was considerably exacerbated by the Samant Group's attempts constantly to alter the frame of reference. When this demand comes from the Samant Group, it is inherently unjust. That it works to the prejudice of the Gidwani Group is perhaps a matter of regret, but one without solution. I do not think it is possible to distinguish between the Deepak Gidwani Group and the Samant Group in this respect. Mr. Dwarkadas is justified in his submission that the pendency of this petition is not attributable to Cadbury India at all. Cadbury India has done nothing to delay the matter. Indeed, to cut short the controversy, it volunteered to have its own valuations set to one side and to have an independent valuation made. Just as no act of a Court can prejudice a party, similarly the inaction of a Court can also not deliver to any party any such prejudice. Such are the perils of litigation in India. I am unable to see any justification for foisting Cadbury India with an interest payment liability even for Deepak Gidwani Group. SECTION 6: THE TWO E & Y REPORTS AND THEIR VALUATION METHODS ....
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....t E & Y did not take into account any premium, although the minority shareholders demanded this. As I have noted, this demand is without basis, and it is hard to fault E & Y on this score alone. The first report returned a valuation of Rs. 1,743/- per fully paid up share. 6.5. The first E & Y report lists various available valuation methods. It says that the DCF method was not used. Nor were any of the others, except the CCM method, and this was assigned a 100% weightage. The tabulation to the report highlights the comparison between Cadbury India and other companies. A detailed description of the working was also provided. The Price/Earnings (P/E) multiples of the companies in comparison were considered. The companies being considered included Nestle. Some form of normalization was effected to level out short-term stock-market volatility. 6.6. One aspect to be noted is that E & Y did in its first report take into account an estimated potential value of shifting from the Cadbury House office. A detailed computation was then not possible for want of specifics such as the timing of the shift, costs of shifting, and intangibles such as the impact on employees, etc. A....
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....variable that must be at hand for all companies in consideration in the CCM analysis. If, for instance, the PAT is unavailable for a given date for one of those companies, a valuer would be justified in falling back on the last available PAT figures. 6.12. It is impossible, on any fair reading of the two E & Y reports, to conclude that there is anything in either of them that is so egregious that it would undoubtedly result in a manifestly skewed, distorted and depressed valuation. 6.13. There is one final matter to which I must refer. There is, in the records, a letter from E & Y dated 2nd March 2012 addressed to the Court. Annexed to this is a statement of sorts. It is E & Y's response to the objections to its second report. I have not referred to or considered this letter or its annexures in this judgment. This was a small, and certainly immaterial, misstep in E & Y's otherwise unexceptionable, even exemplary, conduct. I do not believe that in writing to Court E & Y's intention was to step into the arena. All it sought to do was, in a sense, to defend its report. It is, after all, a firm of considerable standing, and the broadsides from the Samant G....
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....even this enhanced rate, price or valuation is unfair or unreasonable. 7.1.5. Before a Court can decline sanction to a scheme on account of a valuation, an objector to the scheme must first show that the valuation is ex-facie unreasonable, i.e., so unreasonable that it cannot on the face of it be accepted. That unreasonableness must exist on the face of the valuation: one so apparent that "he who runs can read." To upset a valuation, a wrong approach must be demonstrated clearly and unequivocally, and the result must be plainly invidious. A plausible rationale provided by a valuer is not be readily discarded merely because an objector has a different point of view. 7.1.6. In considering an application for sanction will ask itself if, at a minimum, these tests are met: Is a fair and reasonable value being offered to the minority shareholders? Have the majority of non-promoter shareholders voted in favour of the resolution? Can it be said, on reading a valuation as any fair-minded and reasonable person would do, and without microscopic scrutiny, that the valuation is so egregiously wrong that the judicial conscience will not permit it? Has the valuer gone so far off....
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....n itself an accounting burden that is no part of its remit or expertise, and no part of a statutory obligation. In particular, the court must guard against the seductiveness of a proposition that suffers from the fallacy of the undistributed middle: all x is z; some y is z; ergo, all y is z. This seems to me to be the problem with the Samant Group's submission relating to the CCM valuation and comparison with Nestle, and also in regard to its submissions about the acquisition of Cadbury Plc by Kraft. The errors and consequent unreasonableness must be shown to be patent and self-evident. 7.1.11. It is impossible to say which of several available valuation models are "best" or most appropriate. In a given case, the CCM method may be more accurate; in another, the DCF model. There are yet others. No valuation is to be disregarded merely because it has used one or the other of various methods. It must be shown that the chosen method of valuation is such as has resulted in an artificially depressed or contrived valuation well below what a fair-minded person may consider reasonable. SECTION 8: CONCLUSIONS 8.1. In this view of the matter, the only conclusion to be....