Top Stories Supreme Court Ends 50-Year Dispute on CA Firm’s Undervaluation of Shares: Grants 6% Simple Interest from 1975 and 9% Interest Post-Decree [Read Judgment] The Supreme Court observed that the Petitioner had suffered an undeniable financial disadvantage due to the protracted nature of the legal proceedings By Avinash Kurungot – On April 3, 2025 9:23 am – 2 mins read The Supreme Court of india recently resolved a nearly five-decade old dispute regarding the undervaluation of the share price of a Chartered Accountancy (CA) firm, ordering the levy of 6% interest per annum on the estimated share price from 1975 onwards and another 9% interest per annum on the share price from the date of decree till the date of realisation.

The case traces its origins to 1973 when the Rajasthan government acquired shares of Bikaner Gypsums Ltd (later Rajasthan State Mines and Minerals Ltd) from I.K. Merchants Pvt Ltd and other shareholders at a price of ₹11.50 per share, based on a valuation by a CA firm. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today Read More: ₹51L Income Tax Addition u/s.56(2) by Arbitrary Rejection of Share Value Report to Tax Entire Share Premium and Capital: ITAT Orders Deletion The shareholders challenged this valuation as grossly inadequate, initiating legal proceedings in 1978 before the Calcutta High Court. After decades of litigation, the High Court in 2012 appointed independent CA firm Ray & Ray to conduct a fresh valuation. Ray & Ray determined the fair market value at ₹640 per share which had a stark contrast with the prior share price of ₹11.50, resulting in an undervaluation of nearly 98% in the original assessment. Bijoy Kumar Jain submitted before the Apex Court that initial undervaluation had deprived their clients of rightful compensation for half a century.

They emphasized how the original ₹11.50 valuation failed to account for the company’s true worth and future growth potential. The counsel maintained that all the other matters regarding the case had been resolved and the only matter that was pending Read More: HSD-Classification Dispute: Supreme Court Directs Customs to Establish Requisite Testing Facilities to Avert Prolonged Litigation Meanwhile Deepak Goel and Milind Kumar appearing for the Respondents maintained that the 1973 valuation reflected the company’s precarious financial position at the time and that subsequent profits couldn’t justify retroactive adjustments. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today The single-judge Bench of Justice R. Mahadevan observed that the Supreme Court has the full discretion to determine the interest rate at this juncture, on the basis of fairness, commercial usage and equity.

Considering the prolonged pendency of the dispute regarding valuation of shares, and the substantial share amount involved, which had been determined only recently, the Supreme Court proceeded to award simple interest at the rate of 6% per annum from 8th July, 1975 on the enhanced valuation of shares till the date of decree and interest at the rate of 9% per annum from the date of decree till the date of realisation. Read More: No Penalty Imposed When Duty and Interest Paid During Audit: CESTAT Furthermore, the Bench directed the Government to pay the amount due towards the enhanced value of the shares after adjusting the amount already paid out, within a period of 2 months from the date of the judgment.