HC halts Cadbury’s bulldozer

Mumbai, Dec. 20: Cadbury India Limited suffered a setback on Friday when its petition to make the minority shareholders sell back their shares without a choice to the company was rejected by the Bombay high court.

Justice D. Y. Chandrachud, rejecting the Cadbury plea for such dispensation of notice, advised the company to send notices to all the estimated 8,000 minority shareholders and they could send their views and replies to the court directly. The company wanted to dispense with sending notices under section 101(1) and (2) of the Companies Act that pertains to the reduction of capital.

The chocolate multinational had on November 16, passed a special resolution at its EGM for the reduction of its paid-up capital by paying off about 8,000-odd minority shareholders who together hold roughly 2.5 per cent shares. This was strongly objected to by the minority shareholders, so the company moved the Bombay high court to seek a formal approval to reduce its equity capital without having to send notices to the minority shareholders.

The Investors’ Grievance Forum IGF filed an intervention petition and caveat in the Bombay high court against the company’s move to “forcibly and illegally buy out the remaining minority shareholders.”

Mr Hinesh Doshi, a chartered accountant and vice-president IGF, said that the minority shareholders are mainly objecting to such forced and compulsory selling of shares and gross undervaluation. The estimated price per share should not be less than Rs 3,500 per share against the Rs 1,340 reportedly offered by the company.