Open Access Research Article

VALUATION AND MINORITY PROTECTION IN SELECTIVE CAPITAL REDUCTION: REASSESSING THE USE OF DLOM AFTER PANNALAL BHANSALI V. BHARTI TELECOM LTD.

Author(s):
ADAMYA SINGH ANISHA GUPTA
Journal IJLRA
ISSN 2582-6433
Access Open Access
Volume 3
Issue 7
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Abstract

Abstract The 2026 Supreme Court of India decision in Pannalal Bhansali v Bharti Telecom Ltd. affirmed the legality of using selective capital reduction under Section 66 of the Companies Act, 2013, to effectuate minority squeeze-outs. However, the judgment’s treatment of the Discount for Lack of Marketability (DLOM) exposes a critical normative question in Indian corporate jurisprudence. While a marketability discount may accurately reflect the factual illiquidity of unlisted shares in an ordinary, voluntary market transaction, applying this deduction to a compulsory exit raises a distinct concern of distributive fairness. It financially penalises minority shareholders for an illiquidity they did not voluntarily seek to monetise, while the continuing shareholders retain the underlying going-concern value. Indian corporate jurisprudence has traditionally approached such valuation questions through the doctrine of judicial deference to expert commercial judgment established in Miheer Mafatlal. To resolve this tension, this article proposes a framework of “doctrinal bifurcation.” It argues that tribunals should distinguish between the protected mechanics of baseline enterprise valuation and the legally reviewable fairness of post-valuation structural deductions. By adopting a two-stage review framework, the National Company Law Tribunal (NCLT) can defer to expert determination of underlying value while separately subjecting shareholder-level adjustments such as DLOM to a distinct statutory fairness inquiry. This approach provides a judicially manageable mechanism to protect minority shareholders from inequitable outcomes in compulsory exits without requiring tribunals to substitute their own financial judgment for that of valuation experts.  

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Authors: ADAMYA SINGH & ANISHA GUPTARegistration ID: 1013285 | Published Paper ID: IJLRA13285 & IJLRA13286Year: Oct-2026 | Volume: 3 | Issue: 7Approved ISSN: 2582-6433 | Country: Delhi, IndiaPage No.: 392-408

Article Information

VALUATION AND MINORITY PROTECTION IN SELECTIVE CAPITAL REDUCTION: REASSESSING THE USE OF DLOM AFTER PANNALAL BHANSALI V. BHARTI TELECOM LTD.

Authors: ADAMYA SINGH, ANISHA GUPTA

  • Journal IJLRA
  • ISSN 2582-6433
  • Volume 3
  • Issue 7
Citation Download Paper Full Details Search on Google Search on Google Scholar

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International Journal for Legal Research and Analysis

  • AbbreviationIJLRA
  • ISSN2582-6433
  • AccessOpen Access
  • LicenseCC 4.0

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