Case: In Re: Vs. Cadbury India Limited

G.S. Patel, J. A. The Petitioner, Cadbury India Limited (Cadbury India) filed this petition in 2009 under Sections 100 to 104 of the Companies Act, 1956. It is in quite extraordinary circumstances that this petition has been pending for five years. The petition seeks approval of this Court to a special resolution passed by a majority of Cadbury Indias shareholders at an extraordinary general meeting, for reduction of Cadbury Indias share capital. B. Before I turn to the justifications pleaded by Cadbury India in support of its petition, and, later, to the objections taken by various groups of shareholders, a word about the structure of this judgment. (a) In Section 1, for convenience, 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 MalatiSamant (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 follows the section numbers. For convenience, the table of contents below provides the page numbers of each section. 1 SECTION 1: SUMMARY 1.1. Cadbury India seeks this Courts sanction to a special resolution passed by a majority at an extraordinary general meeting approving a scheme for reduction of its share capital. The reason for this share capital reduction is that it is the policy of Cadbury Indias parent companies to operate, where permitted, only through branches or wholly-owned subsidiaries. Before filing this petition, Cadbury India made a series of buy-backs and open offers. It then called an extraordinary general meeting to approve, with or without modification, a special resolution for reduction of its share capital. The meeting was duly convened, held and conducted. There is no complaint about that. An overwhelming majority, including, as we shall presently see, a bulk of the non-promoter minority voted in favour. A minority voted against. Some of those who voted against came to court. There were other opponents to the petition, too. Altogether, about 17 different parties filed opposition affidavits, some by post. Today, all that remain are the Samant and Churiwala Groups. I exclude the Gidwani Group from this because their submission is on a very limited aspect of the matter, having accepted a revised share valuation. 1.2. The petition, as originally brought, was based on two valuation reports. This Court, exercising its discretion, commissioned an independent valuation from a renowned firm, Ernst & Young (E & Y). This was later ordered to be revised. The Samant and Churiwala groups object even to these two Court-compelled E & Y valuations. They say that both are unfair, unreasonable, result in inequity and injustice and ought not to be accepted. They demand acceptance of their own valuation, one that is significantly higher. They have attempted to point to several deficiencies, defects and errors in the two E & Y valuations. The interests of the oppressed minority must prevail, they say. 1.3. After a hearing spread over several days and many hours, on 25th February 2014, I invited both sides to file brief written submissions, no more than 20 pages. I expected these to be a reflection of what was argued before me in Court. 1.4. The Samant Group took 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 may be the interest of a litigant, counsel at the Bar are expected, and not unreasonably so, to conduct themselves in a manner that is not unfair to the opponent and certainly not to the Court itself. This new material put me as a serious disadvantage. I had now to consider material that was never argued; material that I had no opportunity during arguments to consider, on which to raise any query, put any question, clarify any doubt; most of all, material on which I did not have the benefit of hearing the other side. This came after several days of hearing spread over several hours in a matter that has been pending since 2009 before different benches. I granted all parties the same liberty. I made it clear that the written submissions should be brief and concise. This was obviously meant to be an apercu of arguments. It was never intended to offer any party the liberty of a further, virtually unlimited, expansion of the contours of the controversy before me. 1.6. I must also note that this conduct runs to a pattern, one that is discernible on a close reading of the material. To put it plainly: the Samant Group has persistently objected to every single proposal, offer and valuation. It has levelled allegations against valuers, including the Court-appointed valuers, E & Y. It is one thing for an objector to say that it has been hard done by a petitioner-company. It is quite another to accuse a firm of independent professionals appointed by the Court of bias and worse. 1.7. It does not end there. Even more disquieting is the tone adopted in these written submissions: inflammatory, accusatory, intemperate and decidedly uncivil. Allegations of misconduct and deceit are made against Cadbury India. Motives are imputed to E & Y and its representative, apart from the two firms who first prepared a valuation before the petition was filed, both firms of repute (M/s. Bansi S. Mehta & Co. and M/s. SSPA & Co). Worst of all are the allegations, only thinly veiled, against the court itself. It is impossible not to see these as a direct and frontal attack on the court. The Samant Groups written submissions purport to set down in the hard, cold immutability of print things alleged to have transpired in court; matters, incidents and statements that form no part of this Courts record. This is beyond egregious. It is wholly unacceptable. It is to be deprecated. 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 Indias scheme, was merely this: that a Court must, as a matter of law, take on itself the burden of a microscopic examination of an accounting valuation exercise. It must test every assumption behind that valuation. It must weigh every single finding. And even where a valuer has taken a plausible view, the Court must step in and interfere, must jettison that assumption, discard a chosen methodology and defenestrate the valuation, substituting it with one furnished by the opponents only because the opponents find the valuation unsuitable and not to palate. It is not, the submissions seem to suggest, any part of the forensic burden of an opponent to such a scheme to show unequivocally, clearly and unambiguously why the scheme is unfair or unjust. Those results, and damage to the public interest, must be presumed if an opponent can only show that another method or a different assumption might have yielded a different result. Further, a rival or competing valuation by the opponents does not need to be subjected to the same exacting and fine-grained analysis; it is sufficient to show that some other valuation is possible. 1.10. I have found these submissions singularly unappealing and unpersuasive. Another valuation is always possible. Change one assumption and the entire edifice of any valuation might well collapse. Change another, and its facade may radically alter, showing a different picture altogether. This is not, as I understand it, the mandate of the law, nor the scope of the Courts enquiry. Valuations are, by definition, inexact. They do not have an invariable, arithmetical precision. They are approximations, estimations, best-judgment assessments. It is emphatically not for a court to substitute its own view for that of a valuer. It may accept or reject a given valuation, but that must be for cogent reasons and within the well-defined boundaries of what is judicially permissible and what is not. 2 SECTION 2: FACTS 2.1. Incorporated on 19th July 1948 at Mumbai under the Companies Act, 1913, Cadbury Indias name on incorporation was Cadbury Fry (India) Pvt. Ltd. Its name was changed on 7th June 1977 to Cadbury India Pvt. Ltd., and, later that very month, to Cadbury India Ltd. A few years later, in 1982, its name was changed again, this time to Hindustan Cadbury Products Ltd. On 1st December 1989, its name was finally changed to its present name Cadbury India Ltd. 2.2. Cadbury India has its registered office at Cadbury House, Bhulabhai Desai Road, Mumbai 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 capital of Cadbury India stood at Rs. 31,06,95,530 divided into 3,10,69,553 equity shares of Rs. 10/- each and the subscribed share capital was Rs. 31,06,70,400 divided into 3,10,67,040 equity shares of Rs. 10 each. Some 2513 shares were held in abeyance due to either pending Court cases or non-settlement of the payment of rights shares by the shareholder(s) in question. 2.6. The audited accounts of the Company for the year ending 31st December 2008 are annexed to the petition. These show the financial position of the company to be as follows: (overleaf) 2.7. Cadbury Indias promoter or holding company is Cadbury Schweppes Overseas Limited (Cadbury Schweppes). This, in turn, is a subsidiary of Cadbury Plc, UK (Cadbury Plc). Cadbury India says that the global policy of Cadbury Plc is to operate globally only through wholly-owned subsidiaries or branches. Exceptions have had to be made only for compelling business reasons, foreign investment laws or foreign exchange restrictions. From 1948 to 1977 Cadbury India was a wholly-owned subsidiary of Cadbury Schweppes. In 1977, the policy of the Government then in power required Cadbury Schweppes to dilute its shareholding in Cadbury India from 100% to 60%. It was only then that Cadbury India ceased to be a wholly-owned subsidiary of Cadbury Schweppes. 2.8. Thirty five years later, the economic liberalization of 2002 allowed foreign direct investment of up to 100%. Thereafter, Cadbury Schweppes and another group company, i.e., Cadbury Mauritius Ltd. (Cadbury Mauritius; collectively, the Cadbury Group) increased their collective holdings in Cadbury India to 90%. They did so by making various open offers. Public shareholding fell below 10%. Consequently, Cadbury India then got de-listed from the stock exchanges. Over time, the shareholding of the Cadbury Group increased to about 97.583% through a series of open and buy back offers. 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 Indias 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 Indias 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 Groups 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. Cadbury India applied to the Bombay Stock Exchange and to the National Stock Exchange for de-listing; its applications were approved late 2002. Cadbury India was struck off from the BSE and NSE in early 2003. 2.12. BSE imposed a condition to its approval for de-listing: the Cadbury Group would have provide an exit option to the remaining shareholders of Cadbury India and keep it valid for one year. The Cadbury Group made an exit offer to public shareholders at Rs. 500/- per equity share. This offer was open from 16th December 2002 to 15th December 2003. The Cadbury Group continued to accept shares from shareholders at this rate (Rs. 500/- per equity share) till 9th March 2006, since, despite the closure of the exit offer, the Cadbury Group continued to receive queries from public shareholders. 2.13. As of 9th March 2006, the Cadbury Groups shareholding in Cadbury India was 97.44%. 2.14. By its letter dated 5th May 2006, Cadbury India made an offer to buy back 13,54,667 equity shares of Rs. 10 from all shareholders other than Cadbury Schweppes, representing about 3.8% of the paid up capital of Cadbury India, at a price of Rs. 750/- per share. Of these 13,54,667 shares, various shareholders offered 13,52,605 shares for buy back. 2.15. On 11th May 2007, Cadbury India made another buy back proposal in respect of 11,53,374 equity shares held by all public shareholders other than Cadbury Schweppes. These represented 3.4% of the paid up capital of Cadbury India. The buy back price offered was Rs. 815/- per equity share. Cadbury India bought and extinguished 11,53,374 equity shares at this price. 2.16. In 2008, a third buy back offer followed in respect of 10,20,408 shares. The price offered was Rs. 980/- per share. Cadbury India bought and extinguished 10,20,300 equity shares. 2.17. In 2009, a final offer was made in respect of 11,16,505 equity shares at a price of Rs. 1,030/- per equity share. Some 11,16,168 equity shares were bought and extinguished by Cadbury India at this rate. 2.18. On the date of the petition, the Cadbury Group held 97.583% of the equity share capital in Cadbury India. 2.417% remained with others. 2.19. In the petition, Cadbury India relied on the share valuation report of two independent valuers, M/s. Bansi S. Mehta & Co. and M/s. SSPA & Co. These reports both valued 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 Indias 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 these, 3,03,18,464 votes, representing 99.96% of the votes polled, were in favour of the resolution. 12,784 votes, representing 0.04% of the votes polled, were against the resolution. It is to be noted that the explanatory statement to the extraordinary general meeting notice shows that non-promoter shareholders held 7,51,120 shares; those against were, thus, a minority of the minority. 2.20. In the petition, Cadbury India has also set out its financial position in regard to its secured creditors, statutory dues, trade creditors and unsecured loans. This shows that the financial position of the company is sound and is not adversely affected by the proposal of reduction in share capital. 2.21. This petition was filed on 14th December 2009. The opposition came from several sets of shareholders. Of these, only two sets of shareholders, the Samant group and the Churiwala group continue the opposition. The others have in the time since the petition was filed accepted a settlement of their claims. The Gidwani Groups claim is restricted to interest. 2.22. On 15th April 2010, an order was passed in the company petition along with several company applications filed by various objectors. All these objectors took exception to the valuation of Cadbury Indias shares, one that was based on the reports prepared by M/s. Bansi S. Mehta & Co. and SSPA & Co. The Court did not at that stage enter into the controversy or examine the rival merits. In order to cut short the controversy, Cadbury India, through its senior counsel appearing at that time, agreed to a fresh valuation by an independent valuer to be appointed by the Court. The company submitted that this valuation shall be treated as final valuation. It asked for an assurance to this effect. The objectors agreed to the suggestion, with a caveat, noted by the Court, that should the Court find any grave infirmity in the valuation report, then it would be free to interfere. On that basis, an order was passed appointing M/s. Ernst & Young as independent valuers. This valuation was to be as on the appointed date and based on the unaudited balance sheet as on 31st July 2009, taking into account the same material as was provided to M/s. Bansi S. Mehta & Co. and M/s. SSPA & Co. E & Y was permitted to call for additional information. M/s. Bansi S. Mehta & Co. and M/s. SSPA & Co. were directed 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 fully paid up equity share. 2.24. On 2nd August 2013, the Court asked that a representative of E & Y be present in Court. From July 2011 to August 2013, therefore, the matter remained pending. 2.25. The matter was then listed on 13th February 2014 before me. Parag Mehta of E & Y attended Court. He had been in Court on several occasions. I did not think his continued presence was necessary. I dispensed with it noting that should the need arise, the registry would get in touch with him. 2.26. I then heard the matter at considerable length over several days. By this time there was a considerable amount of material in the form of company applications, affidavits in reply and affidavits in rejoinder. There were also the four valuation reports. 2.27. On 25th February 2014, Mr. Ajay Samant, learned Advocate for the Samant group of objectors sought to file a further affidavit. I declined to accept it. The matter was part heard on that day and was not adjourned to enable the filing of further affidavits. The hearing was thereafter concluded and I allowed all parties to submit concise written statements, a matter I have dealt with in Section 1. 2.28. Before I consider the objections, I believe it is important to put the matter in an appropriate factual context. First, there were a series of open offers at a rate of Rs. 500/- per share. Then there was a series of buy back offers at rates ranging from Rs. 750/- per equity share to Rs. 1,030/- per equity share. The petition is based on two valuation reports (of M/s. Bansi S. Mehta & Co. and M/s. SSPA & Co.) that put the valuation of the shares at Rs. 1,340/- per equity share. The Court-ordered first E & Y report returned a valuation of Rs. 1,743/- per equity share. The second E & Y report was based on significantly changed parameters; in fact, the Court itself shifted the goal posts. The second E & Y report of 29th July 2011 reported a valuation of Rs. 2,014.50 per share. Between the first and second E & Y reports, the objectors obtained their own report from one Shri. J.C. Desai, who valued it at Rs. 1,979/- per share plus a control premium. What the objectors (the Samant and Churiwala Groups) now demand is a price of at least Rs. 2,500/- per share. The Samant group holds 499 shares. The Churiwala group holds 1400 shares. The difference between E & Ys second report and 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 Indias financials. 3 SECTION 3: SUMMARY OF THE SAMANT GROUPS 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 2009 it was Rs. 1,743/-. The difference is substantial and works out but approximately Rs. 4198 million when applied to all outstanding shares; 3.1.4. That from all these facts it is clear that it is Cadbury Indias policy to not reward its shareholders, and to treat them in a step-motherly fashion. This is a company that has abundant reserves but has always pegs its dividend payments at 20%; 3.1.5. E & Ys second report does not have a disclosed basis of valuation. There are items in that report that are neither confidential nor proprietary. It has taken figures of 2009 and 2010 these cannot be projections but would be actuals available in the Annual Reports. Cadbury Indias claims to confidentiality and proprietary information have no basis; 3.1.6. That the second E & Y report was a valuation foisted on the minority; 3.1.7. That while the second E & Y report adopted the CCM method, the growth rate of comparable companies is higher and that is the rate of growth that should have been adopted by Cadbury India as well; 3.1.8. That a multinational conglomerate, Kraft Foods Inc. (Kraft), has taken over the holding company of Cadbury Indias holding company, namely Cadbury Plc, and that this should have been reflected in the valuation; 3.1.9. That E & Ys adoption of Cadbury Indias growth rate at 6% is incorrect and should have been taken to be 11%; 3.1.10. That, in any event, E & Y should have insisted on following only the DCF method; 3.1.11. That the sale of Cadbury House has not been factored into the valuation of shares; 3.1.12. That the amount spent in open offers and buy backs was deducted, and ought not to have been. 3.2. The written submissions of the Samant Group fall under nine broad heads: 3.2.1. That there is no disclosed basis of valuation in either of the E & Y reports; 3.2.2. That there is a lack of transparency while filing Cadbury Indias share valuations; 3.2.3. That the valuation of shares by E & Y is incorrect. The DCF method and not the CCM method ought to have been followed. 3.2.4. That E & Y has given an incorrect weightage to both methods; 3.2.5. That there are infirmities in the second E & Y report dated 29th July 2011; 3.2.6. That the valuation is depressed; 3.2.7. That Cadbury Indias conduct inspires no confidence; 3.2.8. That Cadbury Indias 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 Groups 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 additional judgments (including one relied on by Mr. Dwarkadas). 4 SECTION 4: THE POSITION IN LAW 4.1. I propose to begin with a consideration of the last set of submissions first, those on law. It seems to me logical to first consider the settled law on the appropriate judicial approach in such cases. It is only if the objectors fall within those well-defined parameters that their objections can be considered. It is not any and every objection, irrespective of whether it has any basis in fact or justification in law that a Court must uphold. 4.2. The decision of a Division Bench of this Court in Sandvik Asia Limited vs. Bharat Kumar Padamsi&Ors. 2009 (3) Bom CR 57, relied on by Mr. Dwarkadas, is perhaps a fitting starting point. For not only was the situation before the Court in Sandvik very like the present one, but it considered at least four of the decisions separately cited by Mr. Samant in his written submissions: British American Trustee & Finance Corporation Ltd. & Reduced vs. John Couper, 1894 A.C. 399 (H.L.) Poole &Ors vs. National Bank of China, (1907) A.C. 229 (H.L.) In Re: Elpro International Ltd., 2008 (86) SCL 47 (Bom) : [2009] 149 Company Cases 646 (Bom.) and In Re Reckitt Benckiser (India) Ltd. 122 (2005) DLT 612 4.3. In Sandvik, a petition was filed seeking the Courts sanction to a special resolution for reduction in its share capital passed by the members of the appellant-company at an extraordinary general meeting. The resolution was that the share capital of the company would be reduced by paying off or returning to non-promoter equity shareholders an amount of Rs. 850/- per share, of which Rs. 750/- was a premium. That petition, like this one, was filed under Section 100 of the Companies Act, 1956. The petition was opposed. The objectors were non-promoter shareholders. The learned Single Judge declined to sanction the resolution. The company appealed. In appeal it was pointed out, inter alia, that the special resolution was passed by an overwhelming majority of 99.05% of the votes polled of the equity shareholders present and voting, and that only about 0.05% of the votes polled were against the special resolution. Sandvik Asia, like Cadbury India, was de-listed from both stock exchanges. The result was that its shares, like Cadbury Indias, were not freely traded. Sandvik Asia provided an exit option 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 of Poole &Ors, referred to above, squarely apply to the present case. In our opinion once it is established that non-promoter shareholders are being paid fair value of their shares, at no point of time it is even suggested by them that the amount that is being paid is any way less and that even overwhelming majority of the non-promoter shareholders having voted in favour of the resolution shows that the Court will not be justified in withholding its sanction to the resolution. As the Supreme Court has recognised that the judgment of the House of Lords in the case of British & American Trustee and Finance Corporation Ltd. is a leading judgment on the subject, we are justified in considering ourselves bound by the law laid down in that judgment. As we find that there is similarity in the facts in which the observations were made in the judgment in the case of British & American Trustee and Finance Corporation, we will be well advised to follow the law laid down in that case. In our opinion, therefore, the learned single Judge was in error in declining to grant sanction to the special resolution. 4.5. The Supreme Court decision in Ramesh B. Desai followed the decision of the House of Lords in British & American Trustee and Finance Corporation Ltd. (Supra) Paragraph 11 of Ramesh B. Desai reads: 11. The vexed question of the legality of the purchase by a limited company of its won shares was set at rest by the decision of the House of Lords in (Trevor Vs. Whitworth), 1887 (12) AC 409, since which it has been clear law that a limited company cannot purchase its own shares except by way of reduction of capital with the sanction of the court. (See Buckley on the Companies Act, 14 the Edn. p. 1499.) In the same decision it was also held that even express authority to the contrary in the memorandum is unavailing. The main reasons for this prohibition were that such a purchase could either amount to trafficking in its own shares, thereby enabling the Company in an unhealthy manner to influence the price of its own shares on the market, or it would operate as a reduction of capital which can only be effected with the sanction of the Court and in the manner laid down in the statute (see Palmers Company Law, 23rd Edn. p. 440), in Guide to the Companies Act by A. Ramaiya (16th Edn., 951) apart from Trevor Vs. Withworth, British & American Trustee 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 Indias 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 irrelevant that a overwhelming majority of non-promoter shareholders voted in favour of the special resolution. By an extension of this reasoning, every single shareholder can hold to ransom the collective wisdom of shareholders expressed in a properly called, convened and conducted extraordinary general meeting. That cannot possibly be the purpose, ambit or conspectus of Section 100 of the Companies Act, 1956. Were these submissions to be accepted, the entirety of Section 100 might be rendered a dead letter: 100. Special resolution for reduction of share capital. (1) Subject to confirmation by the Court, a company limited by shares or a company limited by guarantee and having a share capital, may, if so authorised by its articles, by special resolution, reduce its share capital in any way; and in particular and without prejudice to the generality of the foregoing power, may-- (a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; (b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost, or is unrepresented by available assets; or (c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly. (2) A special resolution under this section is in this Act referred to as a resolution for reducing share capital. (Emphasis supplied) 4.8. On a plain reading of the statutory provision, the basic requirements of Section 100 are that (1) the Articles of Association of the company must permit such a reduction of share capital; (2) the scheme for reduction must be approved as a special resolution, i.e., at an extraordinary general meeting called for that purpose; and (3) the Courts sanction must be obtained to such a resolution, if passed by the requisite majority. Now the third requirement has this trifecta, albeit not expressly stated: viz., to ensure that (1) the scheme is not against the public interest; (2) the scheme is fair and just; and (3) the scheme does not unfairly discriminate against or prejudice a class of shareholders. Prejudice here 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 is established that non-promoter shareholders are being paid fair value of their shares, at no point of time it is even suggested by them that the amount that is being paid is any way less and that even overwhelming majority of the non-promoter shareholders having voted in favour of the resolution shows that the Court will not be justified in withholding its sanction to the resolution. 4.10. The word less here cannot possibly mean less than what a minority shareholder fancies. It must mean, and mean only, less than what the Court feels reasonable. Therefore, the Court in considering an application for sanction will ask itself if the valuation is fair; if this fair value is being offered to the minority shareholders; and will also test if, on facts, a majority of non-promoter shareholders have voted in favour of the resolution. 4.11. Now in the present case, although an attempt is made to show that the compensation, i.e., the valuation, is per se unfair, incorrect or unreasonable, in fact what is being suggested is that non-promoter shareholders are being discriminated against. Yet, in the present case, nobody suggests that promoter shareholders, or the non-promoters who voted in favour, or any other class of shareholder have got a better deal than any of the objectors. They are not in any way being paid or offered any less. An overwhelming majority of the non-promoter shareholders have already voted in favour of the resolution: there were 7,51,120 non- promoter shares represented at the meeting. Those against held only 12,784 shares. In such a situation, following Sandvik, a court would not be justified in withholding its sanction. 4.12. Much emphasis is lead by Mr. Samant on the decision of the Supreme Court in Miheer H. Mafatlal vs. Mafatlal Industries Ltd. AIR 1997 SC 506 Particular emphasis is lead on paragraph 28 of that decision, which reads thus: 28. The relevant provisions of the Companies Act, 1956 are found in Chapter V of Part VI dealing with Arbitration, Compromises, Arrangements and Reconstructions. In the present proceedings we will be concerned with Sections 391 and 393 of the Act. The relevant provisions thereof read as under: ... The aforesaid provisions of the Act show that compromise or arrangement can be proposed between a company and its creditors or any class of them or between 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 any other person moving such an application for sanction under Sub-section (2) of Section 391 has disclosed all the relevant matters mentioned in the proviso to Sub-section (2) of that Section. So far as the meetings of the creditors or members, or their respective classes for whom the Scheme is proposed are concerned, it is enjoined by Section 391(1)(a) that the requisite information as contemplated by the said provision is also required to be placed for consideration of the concerned voters so that the parties concerned before whom the scheme is placed for voting can take an informed and objective decision whether to vote for the scheme or against it. On a conjoint reading of the relevant provisions of Sections 391 and 393 it becomes at once clear that the Company Court which is called upon to sanction such a scheme has not merely to go by the ipse dixit of the majority of the shareholders or creditors or their respective classes who might have voted in favour of the scheme by requisite majority but the Court has to consider the pros and cons of the scheme with a view to finding out whether the scheme is fair, just and reasonable and is not contrary to any provisions of law and it does not violate any public policy. This is implicit in the very concept of compromise or arrangement which is required to receive the imprimatur of a court of law. No court of law would ever countenance any scheme of compromise or arrangement arrived at between the parties and which might be supported by the requisite majority if the Court finds that it is an unconscionable or an illegal scheme or is otherwise unfair or unjust to the class of shareholder or creditors for whom it is meant. Consequently it cannot be said that a Company Court before whom an application is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members or any class of them for whom the scheme is mooted by the concerned company has to act merely as a rubber stamp and must almost automatically put its seal of approval on such a scheme. It is trite to say that once the scheme gets sanctioned by the Court it would bind even the dissenting minority shareholders or creditors. Therefore, the fairness of the scheme qua them also has to be kept in view by the Company Court while putting its seal of approval on the concerned scheme placed for its sanction. 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: 28-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 scheme should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the scheme as required by Section 391 Sub-section (2). On this aspect the nature of compromise or arrangement between the company and the creditors and members has to be kept in view. It is the commercial wisdom of the parties to the scheme who have taken and informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently the Company Courts jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire in a game of cricket who has to see that both the teams play their game according to the rules and do not overstep the limits. But subject to that how best the game is to be played is left to the players and not to the umpire. (Emphasis supplied) 4.14. I believe Mr. Samants submission to be entirely unfounded. It is nobodys suggestion that the mere ipse dixit of the majority will dictate the hand of the Court. But in assessing whether the scheme is fair, just and reasonable, the Court must have regard to both the terms of these scheme as also to the informed decision taken by the majority of the shareholders. When such a scheme is assessed, there must be cogent, clear and unambiguous material to show that the scheme is inherently unjust or unreasonable. A sanctioning court is not an appellate body. It will not and cannot substitute its own view, however strongly held, for the collective, commercial wisdom of the voting members. 4.15. The only decision cited by Mr. Samant on behalf of the Samant Group in Court was that of the Supreme Court in Dr. Mrs. Renuka Datla vs. Solvay Pharmaceutical B.V. &Ors. (Supra) To my mind, this decision does not support a single one of Mr. Samants submissions. To the 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 these: Miheer H. Mafatlal vs. Mafatlal Industries Ltd.1, Re: Alabama New Orleans Texas & Pacific Junction Railway Company, 1891 (1) CD 213 KEC International Ltd. v. Kamani Employees Union &Ors., 2002 (109) Com Cas 659 (Bom.) Bhagwan Singh & Sons Pvt. Ltd. v. Kalawati&Ors., 1986 (60) Company Cases 94 (Delhi) Dean v. Prince &Ors., 1954 (1) All ER 749 and Burgess v. Purchase & Sons. 1983 (2) All ER 4 In addition, although not circulated there is a reference in these written submissions to other judgments as well: Piramal Spinning and Weaving Mills Ltd., [1980] 50 Com Cas 514 (Bom); Re: Scheme of Amalgamation ICICI Ltd.; (2002) 4 BCR 450 In Re: Grierson Oldham & Adam Ltd., [1967] 1 WLR 357 In Re: Bluestar Ltd., [2001] 104 Com Cas 371 and Sidhpur Mills Company Ltd. AIR 1964 Gujarat 305 It is true that many, and perhaps all, these referenced in Cadbury Indias affidavit dated 20th March 2012. But none were sought to be distinguished by Mr. Samant during oral arguments. 4.17. I do not see how the Samant Groups submissions advance their cause. Indeed, some of them are against the Samant Group. Bluestar, for instance, holds that where a valuation is done by a reputed firm, and is accepted by a majority, even if assets are being transferred at a low price, that does not per se vitiate a valuation report. To dislodge a valuation from a reputed firm, an objector must show mala fides or fraud.2 To show is not merely to allege. Mala fides or fraud must be established. The decisions in Piramal Spinning, ICICI Ltd., Re: Grierson, Oldham and others are all authorities for the proposition that in any valuation, opinions may vary; and that no court should be swayed by acidulated allegations in generalities. A court must be satisfied that the unfairness is gross and patent. Further, as Mr. Dwarkadas points out, business strategies and corporate planning are not the province of courts.3 4.18. There is no quarrelling with the propositions that where there is sufficient material to dislodge a valuation, the Court is justified in withholding its sanction, and that a scheme should not be unfair, unconscionable or contrary to public interest. Indeed, the statement of law in Sidhpur 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 courts guiding principles. Yet these are all apt descriptions of the Samant Groups objections. 5 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 objectors have not been uniformly treated, the scheme is, therefore, unjust and inequitable. This puts the present objections squarely within the frame of Sandvik; and it therefore casts a burden on the Samant Group to demonstrate such discrimination, of being singled out, and of unreasonableness, injustice or inequity. 5.2. The unfairness or inequity that forms the bedrock of the Samant Groups submissions is that there are several shareholders who hold less than 500 shares and who lack the wherewithal for a protracted litigation. This does not in and on itself established unfairness or inequity. Indeed, it was never urged during the oral submission that any shareholders have withdrawn their objections because of the heavy costs of litigation or that this might have had any impact whatsoever on the valuation of Cadbury Indias shares. It is then urged that the take over by Kraft at the grandfather level, i.e., its acquisition of Cadbury Plc, has an impact on the valuation of Cadbury Indias shares. This is stated on the basis that Kraft has a global presence. It has not been demonstrated how this takeover has had any impact, other than the objectors speculation, on Cadbury Indias shares. Additional submissions relate to the sale of Cadbury House, a comparison with other companies such as Nestle, and the imperative for a control premium. 5.3. At least three of these objections should be dealt with first. They occur repeatedly. The first is that E & Y should have been adopted fully the growth rate of comparable companies while using the CCM method. Stated in absolute terms, this is ex-facie untenable. The product mixes, divisions, range of offer, process, markets, wedge bill and pay roll factors are all issues that differentiate companies. It is not possible to say, as Mr. Samant does, that because two companies both happen to make some chocolates and confectionery products, therefore, the growth rate of one must be used for the other without any adjustment. He sought to draw a comparison principally with Nestle, a company used in the E & Y CCM analysis. The suggestion is that Nestles growth rate should have been adopted. This submission is, in my view, entirely misconceived, and to this extent, the comparison is odious. It is true that Nestle does make a range of chocolates. But a very large part of its business 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 Indias 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 Groups 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 Groups claim is that since on 19th January 2010, Nestles shares were being traded at Rs. 2,542/- per share, Cadbury Indias shares should be at least Rs. 2,500/-, for the two must be held to be competitors. For the reasons I have discussed, this comparison and submission is entirely untenable. Even if the net worth of the two companies is proximate, it does not necessarily follow that the market or fair value of their shares would be close, let alone the same. 5.5. The takeover of Cadbury Indias grandfather holding company Cadbury Plc by Kraft can have no possible bearing on the valuation of Cadbury Indias shares; nor have the objectors shown how this development would affect Cadbury Indias operations, profits, P/E ratios or other financial metrics in the least. The argument seems to be this: Kraft is an enormous multinational conglomerate. It has very wide business interests. Through a series of subsidiaries and subsidiaries of subsidiaries, and also perhaps directly, its product portfolio is large. Therefore, Cadbury India, despite its localised markets and restricted product range, must necessarily benefit. In short: Kraft has a high share valuation; Kraft now owns the holding company of the holding company of Cadbury India; therefore Cadbury Indias share valuation must also be high. Clearly, this is incorrect. It ignores every salient parameter in an assessment of Cadbury Indias share valuation. 5.6. The third, much-repeated, allegation relates to the sale of Cadbury House. Cadbury India is reported to have recently sold its property at Bhulabhai Desai Road. Mr. Samant contends that this affects Cadbury Indias share valuation and must be taken into account inter alia because that property has significant development potential. There are two problems with this. The first is that this involves yet another change in the valuation parameters. As I have noted, the Court itself altered the frame of reference when it asked for the second E & Y report. Had that report been dealt with and this matter decided at that time this issue could never have arisen, for the sale is a matter post facto. It simply cannot be that on account of the vagaries of litigation, a petitioner is placed on constantly shifting stands in this manner. Second, the suggestion in oral arguments seemed to be that the sale price was too low, and that E & Y should have factored in the real sale price, as the property is very valuable and can be developed. While the sale price of the property may be known, the value of the development 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 Groups 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 transparency. That is irresponsible. As I have noted, the Court was extremely cautious. It first asked for an independent valuation (the first E & Y report). This was, evidently, to assuage any concerns the objectors might then have had. There was, again as I have previously noted, a certain amount of soul-searching after the first E & Y report was submitted. The Court did not simply accept it. It changed the reference parameters. This was to test whether, on a second pass, a very different result might obtain. It therefore asked for a second report, moving the reference date and asking for the DCF method to be used too. That second E & Y report returned a higher result. How either of these can ever be said to be colourable, suspicious or devoid of transparency defeats me. In paragraph 3 it is even more regrettable that the Samant Group has attempted to place on record matters that are alleged to have transpired at hearings in Court but which form no part of the record. There is absolutely no substance in these submissions. 5.8. In the second E & Y report of 2011, Cadbury Indias shares have been valued by the CCM and DCF methods. Strangely, the results of both these methods are unacceptable to the objectors. The objectors claim that E & Y approach on the CCM method is fraudulent, erroneous and incorrect. They also claim that the valuation of shares on the DCF method is not transparent and is, therefore, unfair as it does not allegedly, have a disclosed basis, and that the projections of Cadbury India have not been disclosed in relation to the DCF analysis in the second E & Y report. Not only is this submission couched in extremely intemperate temperament language, but it does not disclose, other than ungraciously worded allegations, any substantial basis for the challenge on this ground. It ignores, importantly, the fact that the order of 8th July 2011 tied E & Y hand and foot to a non-disclosure and confidentiality requirement. No such disclosure could have been made by E & Y. 5.9. It is not possible for a Court to go into the exercise of carrying out a valuation itself. That, as the Supreme Court said in Miheer H. Mafatlal, is not the Courts remit. Courts do not have the expertise, the time or the means to do this. I do not believe that they are expected to do it. What the Courts approach must be to examine whether or not a 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.4 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 Groups 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 submissions that in computing the share value on the CCM method, the amount utilised for buyback of shares has been deducted. This, according to the Samant Group, cannot be done according to accounting functions and policies pertaining to valuation and it has resulted in further depressing the valuation by Rs. 37/-. Not only is there no material to establish this, it is entirely possible that on this ground alone, more than one view is plausible. The deduction made by accountant is, in fact, logical, given that the petition was filed after a series of open offers and buybacks had already taken place. In effect, what the submission means is that Cadbury Indias shares ought to be valued at a time when it was still a publicly held, listed and traded company with no buybacks having taken place. That would also necessarily mean that the total number of shares in consideration would have to be of the pre-buyback era. This is, after all, a ratio (total equity value divided by number of shares). It is, clearly, an untenable proposition to use a higher numerator (the enterprise equity value before the buyback) and a lower denominator (the total number of shares after the buyback). That seems to be the Samant Groups suggestion. What is manifestly incorrect is, therefore, not what E & Y did, but what the Samant Group proposes. 5.11. The same reason must apply to the further submissions regarding the allegedly incorrect weightage given by the valuer to the DCF and CCM methods respectively. What weightage should be given is itself dependent on a slew of other factors. To merely say that the weightage is incorrect is hardly a sufficient basis to dislodge what, after all, is the collective, commercial decision of a majority, including a majority of the non-promoter minority. In any event, this point was never once argued or urged despite the matter been heard over several days. 5.12. Paragraph 6 of the Samant Groups written submissions contains a repetition of many submissions made elsewhere, including that the future prospects of the company had not been taken into account; that the discounting rate for the DCF method is incorrect; that weightage to the two methods was wrongly given; and that the amount utilised for buybacks options was wrongly taken into account. It is hardly the kind of material on which an entire scheme can be dislodged. 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 Groups 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 the report, and over ten years beyond the valuation date), post December 2020. As I have noted in Section 6, terminal growth rates are routine in DCF analysis. A conservative terminal growth rate over that time frame is probably a more accurate indicator of a projection. 5.14. Another submission made is that the income tax rate has been considered at a flat 33.99%. The submission is that since Cadbury India enjoys various tax benefits, its profits are being taxed at the rate lower than 20% over the past few years. Again there is no substance to this submission. Tax regimes are liable to change. Often they change at short notice. A flat tax rate in a projection might, in fact, provide a very realistic and fairer value than something that is presently at a lower marginal rate. I have already noted that there has been a steadily rising progression in the amount offered by Cadbury India to various non-promoter shareholders for a buyback of their shares. This pattern, one that is self evident, does not sit well with the Samant Groups objections of unfairness. 5.15. I turn now to a set of submissions that are singularly distressing. Paragraph 8 of the Samant Groups written submission is captioned Conduct of the Petitioner Company. Couched in much the same immoderate tone and language as the rest of these written submissions, the contentions under this head are actually not so much about the conduct of Cadbury India as a frontal attack on the Court itself. In using the kind of language that it does, and in making the kind of submissions that it does, the Samant Group sails dangerously close to the wind. Motives are attributed to the Court. It is not permissible for any party to speculate as to why a Court passed a particular order. Our orders speak for themselves. 5.16. What is significantly worse is that on page 23 of the written submissions, the Samant Group has purported to record something that allegedly transpired before the Court. It attributes observations and comments to Court that find no place in any order. An allegation is made that a representative of E & Y tendered a white envelope to the Honble Court and that contents of this were never made known to the minority shareholders. To my mind, this is possibly contemptuous. It is almost certainly contumacious. This is nothing but an attempt to spin this matter 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 annexures cover sheet says that it contains Cadbury Indias projections, along with relevant explanations from its management; and workings on the DCF method. This material had been earlier excised on account of the previous confidentiality restriction. It is said to have been submitted apparently in compliance with directions issued 2nd March 2012. I find no order of 2nd March 2012. None has been uploaded, and there is no such order on file. The E & Y annexure has been wholly disregarded by all courts, including myself. It cannot possibly be anybodys case that it has been looked into by one side, or by the Court, and not shown to the objectors. Anything the Court can see, every party before it should, except in the most extraordinary circumstances, be entitled to see. That document remains as it is; unseen, unconsidered and silent. It can furnish the Samant Group no cause for complaint. 5.19. In paragraph 8, for the first time, it is now alleged that there was a violation of any principle of natural justice. Using words such as manipulated, twisted and the like, especially in reference to what happened in court, is a reprehensible practice to be deprecated in formal legal documents, especially those filed in courts. All law is discourse; and the discourse of law is the discourse of civility. It is easy to make strongly worded and even egregious allegations. More often than not, such allegations are meant only to camouflage a lack of all substance. This case is no exception. The Samant Groups submission is a straw man argument: it seeks to destroy a non-existent case. The submission says very little; but it says it very badly. 5.20. Paragraph 8 of the written submissions also contains a startling submission never made before that no fair valuation can ever be made on the basis of unaudited accounts. This was not once the case in arguments before me. There is neither logic nor material to support this. 5.21. The submissions in paragraph 9, regarding an undervaluation of shares of the Petitioner Company comes for the first time in these written submissions. Many of the subsidiary submissions under this head are repetitive. What is undoubtedly true is that valuation is not an exact science.5 It is always and only an estimation. The fact that a particular estimation might not catch an objectors fancy is no ground to discredit it. The objective of a Courts exercise of its discretionary 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., non-promoters. The Samant Group itself holds only 499 shares. The Churiwala group holds 1400 shares. This means that an overwhelming majority of the shareholders outside the Cadbury Group and also constituted in the minority voted in favour of the scheme. 5.24. I must, at this stage, consider this question of what exactly is meant by minority and majority in the context that is being discussed presently. In the abstract, and at the simplest level, majority would connote the majority of all shareholders of the company across all classes. That is not the correct test here. There are admittedly two classes, the promoter shareholders and the non-promoter shareholders. The promoter shareholders far out-number the non-promoter shareholders. Let us for a moment put aside the promoter-shareholders assent to the scheme, and focus only on the responses of the minority, i.e., the non-promoter shareholders. Within this minority, there are again two classes or divisions: those who voted in favour of the proposed resolution at the extraordinary general meeting, and those who voted against. Where among the non-promoters those in favour out-number those against, it is these that must constitute the relevant majority for the present purposes. When viewed like this, the allegation that has been made by the Samant Group is not so much that they have been done in by the promoter group of Cadbury India, but by those non-promoter shareholders (a minority in the context of all shareholders) who voted in favour of the scheme. We have here, thus, a peculiar situation: overall, the majority of shareholders (including the promoter-shareholders) voted for the scheme. At the same time, the overwhelming bulk of non-promoter shareholders (i.e., a majority of the minority) have also voted in favour of the scheme. Those who voted against held only 12,784 shares. Of those, excluding the Gidwani group, the present group of objectors (the Samant and Churiwala Groups) hold collectively less than 2000 shares of Cadbury India; only 1899 shares. What is this in percentage terms They represent 0.25% of the non-promoter shares at the extraordinary general meeting (7,51,120); under 15% of those who voted against (12,784); and a mere 0.0063% of the total votes cast at the extraordinary general meeting (3,03,31,248). 5.25. It is one thing to 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 Groups 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: 3(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 further and also not to cause prejudice to the Company. The objectors have agreed to the suggestion of Mr. Dwarkadas with a caveat that this Court will be free to interfere with the report in the event that this Court finds any grave infirmity in the valuation report obtained from an independent valuer. 5.27. There was no appeal from this order. There could not have been. I am at a loss to understand how, having once given its solemn assurance to the Court, the Samant Group can attempt to constantly resile from it; to constantly impeach the slightest exercise of discretion by the valuer and paint it as a grave infirmity. I am unable to find any infirmity, let alone one that is grave. The objectors must be held to their assurance solemnly given to the Court. It was, after all, on the basis of that assurance alone that the Court acted as it did, accepting the suggestion from Cadbury India and calling for an independent valuation (twice). It is because of that assurance that Cadbury India, adhering to its own assurance, finds itself faced with a valuation several hundred rupees higher than the one with which it first came to court. Cadbury Indias share purchase offers rose from an initial Rs. 500/- per share to an amount four times as high in the second E & Y report, Rs. 2,014.50/- per fully paid up equity share. Even this does not state the Samant Groups appetency. 5.28. The Samant and Deepak Gidwani groups both submit that they are entitled to interest. All told the Gidwani Groups 30,157 equity shares in Cadbury India are about 15 times more than the Samant and Churiwala Groups. The Gidwani Group has, after an initial objection, specifically accepted the valuation in the second E & Y report of Rs. 2,014.50/- per fully paid up equity share. In its written submissions, the Deepak Gidwani Group claims interest from 30th July 2011 (i.e., from the day after the submission of the second E & Y report) till date. The basis is that had the amount been paid out then, the Gidwani Group would have had use of these funds. This delay is not attributable to the Gidwani Group. Its interests ought, therefore, to be protected. At least as far as the Deepak Gidwani Group is concerned, this is not a submission to be dismissed out of hand. Unfortunately, it so happens that the responsibility for the delay cannot be laid at the door of Cadbury India. That delay was partly attributable to the vicissitudes of litigation in this country. The matter was considerably exacerbated by the Samant Groups 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. 6 SECTION 6: THE TWO E & Y REPORTS AND THEIR VALUATION METHODS 6.1. Discounted Cash Flow analysis, often used to estimate the value of investment opportunities, uses future free cash flow projections that are then discounted, usually using the weighted average cost of capital. This returns a present value, used to derive investment potential. The method has many variables, including what can be used for cash flows and the discount rate. DCF calculations are complex. It adjusts a projected return on an investment for the time value of money. DCF models are not without their inherent limitations. One of the problems that DCF modeling encounters is about the time span itself. One cannot project cash flows to infinity. For this reason, terminal value techniques are used; these are said to be more realistic. A basic annuity may, for instance, be used to estimate the terminal value from the past five or ten years. 6.2. The Multiples method, or the Comparable Companies Multiples method is an alternative theory predicated on the assumption that similar assets sell at similar prices. This assumes a parity in measuring the values of enterprise-specific variables (cash flows, operating margins, etc). An underlying assumption is that the two firms or companies in question are in fact comparable. Marked differences can yield decidedly skewed results. As all valuation is a judgement, CCM provides a simple framework that shows relative values. Calculations in CCM are somewhat easier than in the DCF method. CCM analysis is based on uniformity: both firms must have similar accounting policies, substantially similar business and revenue models, valid valuations, etc. CCM does not lend itself to accurate long-term projections, and cyclical industries require additional compensation. A CCM is essentially a snapshot at a given point in time. It will not easily capture business expansions, evolutions and changes; it is by definition static. 6.3. There are two E & Y reports, both court-ordered. E & Y called the second, of 29th June 2011, a supplementary report. The covering letter indicates that it is an update to the main report. For that reason, both reports of 28th May 2010 and 29th July 2011 are being read as one. This is for the limited purpose of their methods and analysis. It is the valuation in the second, supplementary, report that will govern. 6.4. The first report makes it clear that 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. At that time, E & Y reported that it had been told by Cadbury India that it might not be possible to redevelop the property on account of Coastal Regulation Zone restrictions, and that it had no firm plans to shift its present offices. 6.7. Another factor keyed in by E & Y in its first report was that Cadbury Indias wholly-owned subsidiary, Induri Farms Ltd. (IFL) holds substantial surplus lands. These were reckoned in the valuation on the basis of a report from Cushman & Wakefield, a prominent real estate agency. 6.8. The first E & Y report was based on the unaudited financial statements as on 31st July 2009. Growth rates were obtained from Cadbury India-provided data, which clarified that recent growth was not attributable to accounting standards adopted but to real improvements in business and to organic growth. 6.9. The 8th July 2011 order directed E & Y to update this report to include a valuation based on the DCF method as well as the CCM method, and to reflect a valuation as on 30th September 2009. E & Y was bound to a non-disclosure and confidentiality condition. 6.10. It was on this basis that E & Y submitted its second or supplementary report, now much pilloried by the Samant Group. E & Y assigned equal weightage to both methods. This, as I have noted, is challenged by the Samant Group, but the challenge is without substance. It is impossible to say what competing weightages ought or ought not to have been given. It is, after all, sufficient that the second E & Y report returned a valuation of Rs. 2,014.50 per fully paid up equity share, significantly higher than the valuation in the first E & Y report of Rs. 1,743/- per fully paid up equity share. 6.11. The second E & Y report was based on unaudited financial statements as on 30th September 2009. Again, I find this unexceptionable. It was only for the contrasting CCM method, one that the Samant Group decries, that E & Y applied the weighted average P/E multiples on Cadbury Indias consolidated Profit After Tax (PAT) for the year ending 31st March 2009. The Samant Group says this was wrong, and contrary to the courts order. But what was used was the average P/E multiple for the period from 18th May 2009 to 30th September 2009, a two-month period longer than that taken in the first report (18th May 2009 to 31st July 2009). Also, PAT is a 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 & Ys 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 & Ys otherwise unexceptionable, even exemplary, conduct. I do not believe that in writing to Court E & Ys 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 Group, set on affidavit at about that time, could not have made for pleasant reading, especially since they contained allegations of bias, fraud and worse, and accused E & Y of entering the fray. E & Ys response could only have been an attempt, entirely unnecessary, to defend its integrity and reputation, not to join battle. 7 SECTION 7: GENERAL PRINCIPLES 7.1. In Section 4, I have examined the various authorities cited at the Bar. From these, and from a reading of the statute, I believe it is possible to cull the following principles in such matters. It is not my intention to suggest that these are the only principles, or that this listing is comprehensive. There are undoubtedly other propositions and principles as well. Some of these are stated in the earlier analysis of the objectors submissions. What follows is a listing of what I believe to be general principles of universal application in such matters. 7.1.1. Section 100 requires three things: that (1) the Articles of Association of the company must permit such a reduction of share capital; (2) the scheme for reduction must be approved as a special resolution, i.e., at an extraordinary general meeting called for that purpose; and (3) the Courts sanction must be obtained to such a resolution, if passed by the requisite majority. 7.1.2. In considering the application for sanction, the Court must ensure that (1) the scheme is not against the public interest; (2) the scheme is fair and just, and not unreasonable; and (3) the scheme does not unfairly discriminate against or prejudice a class of shareholders. 7.1.3. Prejudice here must mean something more than just receiving less than what a particular shareholder may desire. It means a concerted attempt to force a class of shareholders to divest themselves of their holdings at a rate far below what is reasonable, fair and just. Prejudice in this context must connote a form of discrimination, a stratagem by which an entire class is forced to accept something that is inherently unjust. 7.1.4. One test of such reasonableness might be to consider the past open offers, extinguishments or buy-backs, and the rate at which these were effected. Where it is found, for instance, that the present offer is significantly higher than previous ones, the burden on an objector is exponentially higher to show that 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-track that the results his valuation returns cannot but be wrong 7.1.7. A court called upon to sanction such a scheme is not bound by the ipse dixit of a majority. It must weigh the scheme and look at it from all angles. It must see whether the scheme is fair, just and reasonable, not unconscionable and is not contrary to any provisions of law and it does not violate any public policy. But it must also balance the commercial wisdom of the shareholders expressed at a properly convened meeting against the desires and fancies of the few. The court will take into account, but not be bound by, the views of the majority. In particular, the court will see what the views are of most of the non-promoter (minority) shareholders at the meeting. If the bulk of them have voted in favour, the court will not lightly disregard this expression of an informed view, one that lies in the domain of corporate strategy and commercial wisdom. 7.1.8. The unfairness must apply to a class, even if that class is of one. This class is not to be identified not by a shared ire against the petitioning company or even an ideological animosity, but by the character or nature of their holding, and by the way that class is sought to be singled out for differential, unfair treatment. 7.1.9. The sanctioning court has no power or jurisdiction to exercise any appellate functions over the scheme. It is not a valuer. It does not have the necessary skills or expertise. It cannot substitute its own opinion for that of the shareholders. Its jurisdiction is peripheral and supervisory, not appellate. The Court is not 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. 7.1.10. Valuation is not an exact science. Far from it. It is always and only an estimation, a best-judgment assessment. The fact that a particular estimation might not catch an objectors fancy is no ground to discredit it. All valuations proceed on assumptions. To dislodge a valuation, it must be shown that those assumptions are such as could never have been made, and that they are so patently erroneous that the end result itself could not but be wrong, unfair and unreasonable. The court must not venture into the realm of convoluted analysis, extrapolation, and taking on 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.6 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. 8 SECTION 8: CONCLUSIONS

Decision:
1[ds]It seems to me logical to first consider the settled law on the appropriate judicial approach in such cases. It is only if the objectors fall within those well-defined parameters that their objections can be considered. It is not any and every objection, irrespective of whether it has any basis in fact or justification in law that a Court must uphold.4.2. The decision of a Division Bench of this Court in Sandvik Asia Limited vs. Bharat Kumar Padamsi&Ors.2009 (3) Bom CR 57, relied on by Mr. Dwarkadas, is perhaps a fitting starting point. For not only was the situation before the Court in Sandvik very like the present one, but it considered at least four of the decisions separately cited by Mr. Samant in his written submissions: British American Trustee & Finance Corporation Ltd. & Reduced vs. John Couper, 1894 A.C. 399 (H.L.) Poole &Ors vs. National Bank of China, (1907) A.C. 229 (H.L.) In Re: Elpro International Ltd.,2008 (86) SCL 47 (Bom) : [2009] 149 Company Cases 646  (Bom.) and In Re Reckitt Benckiser (India) Ltd.122 (2005) DLT 612  4.3. In Sandvik, a petition was filed seeking the Courts sanction to a special resolution for reduction in its share capital passed by the members of the appellant-company at an extraordinary general meeting. The resolution was that the share capital of the company would be reduced by paying off or returning to non-promoter equity shareholders an amount of Rs. 850/- per share, of which Rs. 750/- was a premium. That petition, like this one, was filed under Section 100 of the Companies Act, 1956. The petition was opposed. The objectors were non-promoter shareholders. The learned Single Judge declined to sanction the resolution. The company appealed. In appeal it was pointed out, inter alia, that the special resolution was passed by an overwhelming majority of 99.05% of the votes polled of the equity shareholders present and voting, and that only about 0.05% of the votes polled were against the special resolution. Sandvik Asia, like Cadbury India, was de-listed from both stock exchanges. The result was that its shares, like Cadbury Indias, were not freely traded. Sandvik Asia provided an exit option 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 of Poole &Ors, referred to above, squarely apply to the present case. In our opinion once it is established that non-promoter shareholders are being paid fair value of their shares, at no point of time it is even suggested by them that the amount that is being paid is any way less and that even overwhelming majority of the non-promoter shareholders having voted in favour of the resolution shows that the Court will not be justified in withholding its sanction to the resolution. As the Supreme Court has recognised that the judgment of the House of Lords in the case of British & American Trustee and Finance Corporation Ltd. is a leading judgment on the subject, we are justified in considering ourselves bound by the law laid down in that judgment. As we find that there is similarity in the facts in which the observations were made in the judgment in the case of British & American Trustee and Finance Corporation, we will be well advised to follow the law laid down in that case. In our opinion, therefore, the learned single Judge was in error in declining to grant sanction to the special resolution.4.5. The Supreme Court decision in Ramesh B. Desai followed the decision of the House of Lords in British & American Trustee and Finance Corporation Ltd. (Supra) Paragraph 11 of Ramesh B. Desai reads:11. The vexed question of the legality of the purchase by a limited company of its won shares was set at rest by the decision of the House of Lords in (Trevor Vs. Whitworth), 1887 (12) AC 409, since which it has been clear law that a limited company cannot purchase its own shares except by way of reduction of capital with the sanction of the court. (See Buckley on the Companies Act, 14 the Edn. p. 1499.) In the same decision it was also held that even express authority to the contrary in the memorandum is unavailing. The main reasons for this prohibition were that such a purchase could either amount to trafficking in its own shares, thereby enabling the Company in an unhealthy manner to influence the price of its own shares on the market, or it would operate as a reduction of capital which can only be effected with the sanction of the Court and in the manner laid down in the statute (see Palmers Company Law, 23rd Edn. p. 440), in Guide to the Companies Act by A. Ramaiya (16th Edn., 951) apart from Trevor Vs. Withworth, British & American Trustee 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 Indias 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 irrelevant that a overwhelming majority of non-promoter shareholders voted in favour of the special resolution. By an extension of this reasoning, every single shareholder can hold to ransom the collective wisdom of shareholders expressed in a properly called, convened and conducted extraordinary general meeting. That cannot possibly be the purpose, ambit or conspectus of Section 100 of the Companies Act, 1956. Were these submissions to be accepted, the entirety of Section 100 might be rendered a dead letter:100. Special resolution for reduction of share capital.(1) Subject to confirmation by the Court, a company limited by shares or a company limited by guarantee and having a share capital, may, if so authorised by its articles, by special resolution, reduce its share capital in any way; and in particular and without prejudice to the generality of the foregoing power, may(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up;(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost, or is unrepresented by available assets; or(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.(2) A special resolution under this section is in this Act referred to as a resolution for reducing share capital.4.8. On a plain reading of the statutory provision, the basic requirements of Section 100 are that (1) the Articles of Association of the company must permit such a reduction of share capital; (2) the scheme for reduction must be approved as a special resolution, i.e., at an extraordinary general meeting called for that purpose; and (3) the Courts sanction must be obtained to such a resolution, if passed by the requisite majority. Now the third requirement has this trifecta, albeit not expressly stated: viz., to ensure that (1) the scheme is not against the public interest; (2) the scheme is fair and just; and (3) the scheme does not unfairly discriminate against or prejudice a class of shareholders. Prejudice here 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 pittance4.9. 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 is established that non-promoter shareholders are being paid fair value of their shares, at no point of time it is even suggested by them that the amount that is being paid is any way less and that even overwhelming majority of the non-promoter shareholders having voted in favour of the resolution shows that the Court will not be justified in withholding its sanction to the resolution.4.10. The word less here cannot possibly mean less than what a minority shareholder fancies. It must mean, and mean only, less than what the Court feels reasonable. Therefore, the Court in considering an application for sanction will ask itself if the valuation is fair; if this fair value is being offered to the minority shareholders; and will also test if, on facts, a majority of non-promoter shareholders have voted in favour of the resolution.4.11. Now in the present case, although an attempt is made to show that the compensation, i.e., the valuation, is per se unfair, incorrect or unreasonable, in fact what is being suggested is that non-promoter shareholders are being discriminated against. Yet, in the present case, nobody suggests that promoter shareholders, or the non-promoters who voted in favour, or any other class of shareholder have got a better deal than any of the objectors. They are not in any way being paid or offered any less. An overwhelming majority of the non-promoter shareholders have already voted in favour of the resolution: there were 7,51,120 non- promoter shares represented at the meeting. Those against held only 12,784 shares. In such a situation, following Sandvik, a court would not be justified in withholding its sanction.4.14. I believe Mr. Samants submission to be entirely unfounded. It is nobodys suggestion that the mere ipse dixit of the majority will dictate the hand of the Court. But in assessing whether the scheme is fair, just and reasonable, the Court must have regard to both the terms of these scheme as also to the informed decision taken by the majority of the shareholders. When such a scheme is assessed, there must be cogent, clear and unambiguous material to show that the scheme is inherently unjust or unreasonable. A sanctioning court is not an appellate body. It will not and cannot substitute its own view, however strongly held, for the collective, commercial wisdom of the voting members.4.15. The only decision cited by Mr. Samant on behalf of the Samant Group in Court was that of the Supreme Court in Dr. Mrs. Renuka Datla vs. Solvay Pharmaceutical B.V. &Ors. (Supra) To my mind, this decision does not support a single one of Mr. Samants submissions. To the 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 these: Miheer H. Mafatlal vs. Mafatlal Industries Ltd.1, Re: Alabama New Orleans Texas & Pacific Junction Railway Company, 1891 (1) CD 213 KEC International Ltd. v. Kamani Employees Union &Ors.,2002 (109) Com Cas 659 (Bom.) Bhagwan Singh & Sons Pvt. Ltd. v. Kalawati&Ors.,1986 (60) Company Cases 94 (Delhi)  Dean v. Prince &Ors., 1954 (1) All ER 749 and Burgess v. Purchase & Sons. 1983 (2) All ER 4 In addition, although not circulated there is a reference in these written submissions to other judgments as well: Piramal Spinning and Weaving Mills Ltd.,[1980] 50 Com Cas 514 (Bom); Re: Scheme of Amalgamation ICICI Ltd.;(2002) 4 BCR 450   In Re: Grierson Oldham & Adam Ltd., [1967] 1 WLR 357 In Re: Bluestar Ltd., [2001] 104 Com Cas 371   and Sidhpur Mills Company Ltd.AIR 1964 Gujarat 305 It is true that many, and perhaps all, these referenced in Cadbury Indias affidavit dated 20th March 2012. But none were sought to be distinguished by Mr. Samant during oral arguments.4.17. I do not see how the Samant Groups submissions advance their cause. Indeed, some of them are against the Samant Group. Bluestar, for instance, holds that where a valuation is done by a reputed firm, and is accepted by a majority, even if assets are being transferred at a low price, that does not per se vitiate a valuation report. To dislodge a valuation from a reputed firm, an objector must show mala fides or fraud.2 To show is not merely to allege. Mala fides or fraud must be established. The decisions in Piramal Spinning, ICICI Ltd., Re: Grierson, Oldham and others are all authorities for the proposition that in any valuation, opinions may vary; and that no court should be swayed by acidulated allegations in generalities. A court must be satisfied that the unfairness is gross and patent. Further, as Mr. Dwarkadas points out, business strategies and corporate planning are not the province of courts.34.18. There is no quarrelling with the propositions that where there is sufficient material to dislodge a valuation, the Court is justified in withholding its sanction, and that a scheme should not be unfair, unconscionable or contrary to public interest. Indeed, the statement of law in Sidhpur 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 courts guiding principles. Yet these are all apt descriptions of the Samant Groups objections.5.4. Let us consider for a moment the fallibility of Samant Groups 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 Groups claim is that since on 19th January 2010, Nestles shares were being traded at Rs. 2,542/- per share, Cadbury Indias shares should be at least Rs. 2,500/-, for the two must be held to be competitors. For the reasons I have discussed, this comparison and submission is entirely untenable. Even if the net worth of the two companies is proximate, it does not necessarily follow that the market or fair value of their shares would be close, let alone the same.5.5. The takeover of Cadbury Indias grandfather holding company Cadbury Plc by Kraft can have no possible bearing on the valuation of Cadbury Indias shares; nor have the objectors shown how this development would affect Cadbury Indias operations, profits, P/E ratios or other financial metrics in the least. The argument seems to be this: Kraft is an enormous multinational conglomerate. It has very wide business interests. Through a series of subsidiaries and subsidiaries of subsidiaries, and also perhaps directly, its product portfolio is large. Therefore, Cadbury India, despite its localised markets and restricted product range, must necessarily benefit. In short: Kraft has a high share valuation; Kraft now owns the holding company of the holding company of Cadbury India; therefore Cadbury Indias share valuation must also be high. Clearly, this is incorrect. It ignores every salient parameter in an assessment of Cadbury Indias share valuation.5.6. The third, much-repeated, allegation relates to the sale of Cadbury House. Cadbury India is reported to have recently sold its property at Bhulabhai Desai Road. Mr. Samant contends that this affects Cadbury Indias share valuation and must be taken into account inter alia because that property has significant development potential. There are two problems with this. The first is that this involves yet another change in the valuation parameters. As I have noted, the Court itself altered the frame of reference when it asked for the second E & Y report. Had that report been dealt with and this matter decided at that time this issue could never have arisen, for the sale is a matter post facto. It simply cannot be that on account of the vagaries of litigation, a petitioner is placed on constantly shifting stands in this manner. Second, the suggestion in oral arguments seemed to be that the sale price was too low, and that E & Y should have factored in the real sale price, as the property is very valuable and can be developed. While the sale price of the property may be known, the value of the development 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 Groups 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 transparency. That is irresponsible. As I have noted, the Court was extremely cautious. It first asked for an independent valuation (the first E & Y report). This was, evidently, to assuage any concerns the objectors might then have had. There was, again as I have previously noted, a certain amount of soul-searching after the first E & Y report was submitted. The Court did not simply accept it. It changed the reference parameters. This was to test whether, on a second pass, a very different result might obtain. It therefore asked for a second report, moving the reference date and asking for the DCF method to be used too. That second E & Y report returned a higher result. How either of these can ever be said to be colourable, suspicious or devoid of transparency defeats me. In paragraph 3 it is even more regrettable that the Samant Group has attempted to place on record matters that are alleged to have transpired at hearings in Court but which form no part of the record. There is absolutely no substance in these submissions.5.8. In the second E & Y report of 2011, Cadbury Indias shares have been valued by the CCM and DCF methods. Strangely, the results of both these methods are unacceptable to the objectors. The objectors claim that E & Y approach on the CCM method is fraudulent, erroneous and incorrect. They also claim that the valuation of shares on the DCF method is not transparent and is, therefore, unfair as it does not allegedly, have a disclosed basis, and that the projections of Cadbury India have not been disclosed in relation to the DCF analysis in the second E & Y report. Not only is this submission couched in extremely intemperate temperament language, but it does not disclose, other than ungraciously worded allegations, any substantial basis for the challenge on this ground. It ignores, importantly, the fact that the order of 8th July 2011 tied E & Y hand and foot to a non-disclosure and confidentiality requirement. No such disclosure could have been made by E & Y.5.9. It is not possible for a Court to go into the exercise of carrying out a valuation itself. That, as the Supreme Court said in Miheer H. Mafatlal, is not the Courts remit. Courts do not have the expertise, the time or the means to do this. I do not believe that they are expected to do it. What the Courts approach must be to examine whether or not a 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.4 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 Groups 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 submissions that in computing the share value on the CCM method, the amount utilised for buyback of shares has been deducted. This, according to the Samant Group, cannot be done according to accounting functions and policies pertaining to valuation and it has resulted in further depressing the valuation by Rs. 37/-. Not only is there no material to establish this, it is entirely possible that on this ground alone, more than one view is plausible. The deduction made by accountant is, in fact, logical, given that the petition was filed after a series of open offers and buybacks had already taken place. In effect, what the submission means is that Cadbury Indias shares ought to be valued at a time when it was still a publicly held, listed and traded company with no buybacks having taken place. That would also necessarily mean that the total number of shares in consideration would have to be of the pre-buyback era. This is, after all, a ratio (total equity value divided by number of shares). It is, clearly, an untenable proposition to use a higher numerator (the enterprise equity value before the buyback) and a lower denominator (the total number of shares after the buyback). That seems to be the Samant Groups suggestion. What is manifestly incorrect is, therefore, not what E & Y did, but what the Samant Group proposes.5.11. The same reason must apply to the further submissions regarding the allegedly incorrect weightage given by the valuer to the DCF and CCM methods respectively. What weightage should be given is itself dependent on a slew of other factors. To merely say that the weightage is incorrect is hardly a sufficient basis to dislodge what, after all, is the collective, commercial decision of a majority, including a majority of the non-promoter minority. In any event, this point was never once argued or urged despite the matter been heard over several days.5.12. Paragraph 6 of the Samant Groups written submissions contains a repetition of many submissions made elsewhere, including that the future prospects of the company had not been taken into account; that the discounting rate for the DCF method is incorrect; that weightage to the two methods was wrongly given; and that the amount utilised for buybacks options was wrongly taken into account. It is hardly the kind of material on which an entire scheme can be dislodged.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 Groups 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 the report, and over ten years beyond the valuation date), post December 2020. As I have noted in Section 6, terminal growth rates are routine in DCF analysis. A conservative terminal growth rate over that time frame is probably a more accurate indicator of a projection.5.14. Another submission made is that the income tax rate has been considered at a flat 33.99%. The submission is that since Cadbury India enjoys various tax benefits, its profits are being taxed at the rate lower than 20% over the past few years.Again there is no substance to this submission. Tax regimes are liable to change. Often they change at short notice. A flat tax rate in a projection might, in fact, provide a very realistic and fairer value than something that is presently at a lower marginal rate. I have already noted that there has been a steadily rising progression in the amount offered by Cadbury India to various non-promoter shareholders for a buyback of their shares. This pattern, one that is self evident, does not sit well with the Samant Groups objections of unfairness.5.15. I turn now to a set of submissions that are singularly distressing. Paragraph 8 of the Samant Groups written submission is captioned Conduct of the Petitioner Company. Couched in much the same immoderate tone and language as the rest of these written submissions, the contentions under this head are actually not so much about the conduct of Cadbury India as a frontal attack on the Court itself. In using the kind of language that it does, and in making the kind of submissions that it does, the Samant Group sails dangerously close to the wind. Motives are attributed to the Court. It is not permissible for any party to speculate as to why a Court passed a particular order. Our orders speak for themselves.5.16. What is significantly worse is that on page 23 of the written submissions, the Samant Group has purported to record something that allegedly transpired before the Court. It attributes observations and comments to Court that find no place in any order. An allegation is made that a representative of E & Y tendered a white envelope to the Honble Court and that contents of this were never made known to the minority shareholders. To my mind, this is possibly contemptuous. It is almost certainly contumacious. This is nothing but an attempt to spin this matter 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.5.18. 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 annexures cover sheet says that it contains Cadbury Indias projections, along with relevant explanations from its management; and workings on the DCF method. This material had been earlier excised on account of the previous confidentiality restriction. It is said to have been submitted apparently in compliance with directions issued 2nd March 2012. I find no order of 2nd March 2012. None has been uploaded, and there is no such order on file. The E & Y annexure has been wholly disregarded by all courts, including myself. It cannot possibly be anybodys case that it has been looked into by one side, or by the Court, and not shown to the objectors. Anything the Court can see, every party before it should, except in the most extraordinary circumstances, be entitled to see. That document remains as it is; unseen, unconsidered and silent. It can furnish the Samant Group no cause for complaint.5.19. In paragraph 8, for the first time, it is now alleged that there was a violation of any principle of natural justice. Using words such as manipulated, twisted and the like, especially in reference to what happened in court, is a reprehensible practice to be deprecated in formal legal documents, especially those filed in courts. All law is discourse; and the discourse of law is the discourse of civility. It is easy to make strongly worded and even egregious allegations. More often than not, such allegations are meant only to camouflage a lack of all substance. This case is no exception. The Samant Groups submission is a straw man argument: it seeks to destroy a non-existent case. The submission says very little; but it says it very badly.5.20. Paragraph 8 of the written submissions also contains a startling submission never made before that no fair valuation can ever be made on the basis of unaudited accounts. This was not once the case in arguments before me. There is neither logic nor material to support this.5.21. The submissions in paragraph 9, regarding an undervaluation of shares of the Petitioner Company comes for the first time in these written submissions. Many of the subsidiary submissions under this head are repetitive. What is undoubtedly true is that valuation is not an exact science.5 It is always and only an estimation. The fact that a particular estimation might not catch an objectors fancy is no ground to discredit it. The objective of a Courts exercise of its discretionary 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., non-promoters. The Samant Group itself holds only 499 shares. The Churiwala group holds 1400 shares. This means that an overwhelming majority of the shareholders outside the Cadbury Group and also constituted in the minority voted in favour of the scheme.5.24. I must, at this stage, consider this question of what exactly is meant by minority and majority in the context that is being discussed presently. In the abstract, and at the simplest level, majority would connote the majority of all shareholders of the company across all classes. That is not the correct test here. There are admittedly two classes, the promoter shareholders and the non-promoter shareholders. The promoter shareholders far out-number the non-promoter shareholders. Let us for a moment put aside the promoter-shareholders assent to the scheme, and focus only on the responses of the minority, i.e., the non-promoter shareholders. Within this minority, there are again two classes or divisions: those who voted in favour of the proposed resolution at the extraordinary general meeting, and those who voted against. Where among the non-promoters those in favour out-number those against, it is these that must constitute the relevant majority for the present purposes. When viewed like this, the allegation that has been made by the Samant Group is not so much that they have been done in by the promoter group of Cadbury India, but by those non-promoter shareholders (a minority in the context of all shareholders) who voted in favour of the scheme. We have here, thus, a peculiar situation: overall, the majority of shareholders (including the promoter-shareholders) voted for the scheme. At the same time, the overwhelming bulk of non-promoter shareholders (i.e., a majority of the minority) have also voted in favour of the scheme. Those who voted against held only 12,784 shares. Of those, excluding the Gidwani group, the present group of objectors (the Samant and Churiwala Groups) hold collectively less than 2000 shares of Cadbury India; only 1899 shares. What is this in percentage terms They represent 0.25% of the non-promoter shares at the extraordinary general meeting (7,51,120); under 15% of those who voted against (12,784); and a mere 0.0063% of the total votes cast at the extraordinary general meeting (3,03,31,248).5.25. It is one thing to 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 Groups shrill lamentations of unjust and inequity.5.27. There was no appeal from this order. There could not have been. I am at a loss to understand how, having once given its solemn assurance to the Court, the Samant Group can attempt to constantly resile from it; to constantly impeach the slightest exercise of discretion by the valuer and paint it as a grave infirmity. I am unable to find any infirmity, let alone one that is grave. The objectors must be held to their assurance solemnly given to the Court. It was, after all, on the basis of that assurance alone that the Court acted as it did, accepting the suggestion from Cadbury India and calling for an independent valuation (twice). It is because of that assurance that Cadbury India, adhering to its own assurance, finds itself faced with a valuation several hundred rupees higher than the one with which it first came to court. Cadbury Indias share purchase offers rose from an initial Rs. 500/- per share to an amount four times as high in the second E & Y report, Rs. 2,014.50/- per fully paid up equity share. Even this does not state the Samant Groups appetency.5.28. The Samant and Deepak Gidwani groups both submit that they are entitled to interest. All told the Gidwani Groups 30,157 equity shares in Cadbury India are about 15 times more than the Samant and Churiwala Groups. The Gidwani Group has, after an initial objection, specifically accepted the valuation in the second E & Y report of Rs. 2,014.50/- per fully paid up equity share. In its written submissions, the Deepak Gidwani Group claims interest from 30th July 2011 (i.e., from the day after the submission of the second E & Y report) till date. The basis is that had the amount been paid out then, the Gidwani Group would have had use of these funds. This delay is not attributable to the Gidwani Group. Its interests ought, therefore, to be protected. At least as far as the Deepak Gidwani Group is concerned, this is not a submission to be dismissed out of hand. Unfortunately, it so happens that the responsibility for the delay cannot be laid at the door of Cadbury India. That delay was partly attributable to the vicissitudes of litigation in this country. The matter was considerably exacerbated by the Samant Groups 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.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 & Ys 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 & Ys otherwise unexceptionable, even exemplary, conduct. I do not believe that in writing to Court E & Ys 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 Group, set on affidavit at about that time, could not have made for pleasant reading, especially since they contained allegations of bias, fraud and worse, and accused E & Y of entering the fray. E & Ys response could only have been an attempt, entirely unnecessary, to defend its integrity and reputation, not to join battle.7.1. In Section 4, I have examined the various authorities cited at the Bar. From these, and from a reading of the statute, I believe it is possible to cull the following principles in such matters. It is not my intention to suggest that these are the only principles, or that this listing is comprehensive. There are undoubtedly other propositions and principles as well. Some of these are stated in the earlier analysis of the objectors submissions. What follows is a listing of what I believe to be general principles of universal application in such matters.7.1.10. Valuation is not an exact science. Far from it. It is always and only an estimation, a best-judgment assessment. The fact that a particular estimation might not catch an objectors fancy is no ground to discredit it. All valuations proceed on assumptions. To dislodge a valuation, it must be shown that those assumptions are such as could never have been made, and that they are so patently erroneous that the end result itself could not but be wrong, unfair and unreasonable. The court must not venture into the realm of convoluted analysis, extrapolation, and taking on 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.6 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.