Latest hc judgment on selective reduction of share capital

Dear All,

The division bench of Hon’ble Delhi High Court vide its order dated 07.03.2012 in Company Appeal no. 1/2012 has dismissed the plea of a minority shareholder of Reckitt Benckiser(India) Ltd. (“RBIL”) challenging the order of the single Company Judge confirming the selective reduction of share capital of RBIL.

The said shareholder objected to the reduction of share capital of RBIL inter-alia on the grounds that:

(i)                 the proposal for reduction was nothing but a product of wrong economic policies of the Government of India of removing the sectoral caps in personal care and health sector;

(ii)               the reduction amounted to “forcible acquisition” of shares of public shareholders in as much as the shares of the promoter group remained unaffected;

(iii)             the reduction was with the intent to “eliminate” the minority public shareholders and was thus wholly unfair, discriminatory and mala fide;

(iv)             the reduction if any in the share capital should be spread equally over all the different classes of shareholders

Rejecting the above grounds and the sympathetic plea that the appellant is 80 years of age and had acquired the shares of RBIL nearly 35 years ago, the division bench of Hon’ble Delhi High Court upheld the order of single Company Judge approving the reduction of share capital of RBIL.

Copy of the above referred judgments is attached herewith for your reference.  

Regards