NCLAT has stayed a share buyout order in a minority oppression case, citing concerns over the independence and reliability of the disputed valuation report.
NCLAT Stays Share Buyout Order Amid Valuation Report Concerns in Minority Shareholder Dispute
The National Company Law Appellate Tribunal (NCLAT) has stayed the implementation of a share buyout order in a case concerning 33.2% shareholding, where allegations of oppression and mismanagement were levelled by minority shareholders. The stay was granted due to serious concerns about the independence and methodology of the valuation report relied upon by the adjudicating authority.
The petitioners challenged the valuation methodology, alleging that the valuer had a prior professional relationship with the majority shareholders, raising a conflict of interest. The NCLAT, noting the potential for bias, held that a fair valuation is central to equitable buyout determinations under Section 241-242 of the Companies Act, 2013. It directed the constitution of an independent panel of valuers to reassess the share price.
"The integrity of the valuation process cannot be compromised where corporate oppression is alleged,"
the Tribunal stated. This ruling underscores the necessity for transparency and neutrality in expert opinions during shareholder dispute resolutions. Legal practitioners must rigorously vet valuer independence and ensure procedural fairness in such cases.
Citations
- In re: [Unnamed Company Proceedings] (2026) NCLAT
