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CASE NO.: Appeal (civil)  9258-9265 of 2003

PETITIONER: Technip SA

RESPONDENT: SMS Holding (Pvt.) Ltd. & Ors.

DATE OF JUDGMENT: 11/05/2005

BENCH: Ruma Pal, Arijit Pasayat & C.K. Thakker

JUDGMENT: J U D G M E N T

With  CA Nos.10092-10098/2003

RUMA PAL, J.                          There are five main protagonists in these appeals, the  appellant, Technip, a company incorporated in France,   Coflexip, also incorporated in France, the Institut Francais du  Petrol (referred to as IFP)  which through its subsidiary ISIS, a  company incorporated in France, was a shareholder in Technip  and Coflexip, South East Asia Marine Engineering and  Construction Ltd. (referred to as SEAMEC),  a company  incorporated  and registered in India and finally the respondents  who are the shareholders of SEAMEC. SEAMEC is a  subsidiary of Coflexip in the sense that Coflexip  through a  chain of  wholly owned subsidiaries controls the majority  shareholding in SEAMEC.  The question which arises for consideration in these  appeals is whether Technip acquired control of SEAMEC  through Coflexip in April, 2000, or in July, 2001? There is no  dispute that if Technip  controls Coflexip then it also controls  SEAMEC and if there has been a change of control of  SEAMEC then Technip would be bound to offer to purchase the  shares of the minority shareholders in SEAMEC in accordance  with the provisions of the Securities And Exchange Board of  India (Substantial Acquisition of Shares and  Takeover)Regulations, 1997 (hereinafter referred to as the  Regulations). The importance of the date of control/acquisition  is because of the price of the shares payable on such public  offer.  In this case the price of SEAMEC shares in April 2000  was   Rs.238 per share which was much higher than the price  of       Rs.43.12 per share in July, 2001. Technip had not made  any public announcement at all, either in April 2000 or in July,  2001. On the complaint of certain shareholders of SEAMEC  before the Securities and Exchange Board of India (SEBI),  proceedings were initiated against Technip under the Securities  and Exchange Board of India Act, 1992 (referred as ’the Act’).   SEBI held that French law applied to the takeover of Coflexip  and consequently SEAMEC by Technip for the purpose of  determining when such takeover was effected. It found that the  Technip had obtained control of Coflexip in July 2001 and had  violated  Regulations 10 and 12 of the Regulations thereby   acquiring 58.24% of the shares/voting rights and control in  SEAMEC in July 2001 without making any public offer.  Technip  was accordingly directed by SEBI to make a public

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announcement as required under the Regulations within 45  days of its order taking 3rd July, 2001 as the specified date for  calculation of the offered price.  Technip was also directed to  pay interest at the rate of 15% per annum to the willing minority  shareholders of SEAMEC, for the delayed public  announcement. The minority shareholders of SEAMEC preferred an  appeal from SEBI’s order before the Securities Appellate  Tribunal (SAT) constituted under the Act.  Their grievance was  that the date of control of Coflexip by Technip was 12.4.2000  and not 3rd July, 2001 as held by SEBI. While the appeal was  pending, pursuant to an interim order passed by the Tribunal,  Technip implemented the order of SEBI by making a public  announcement  to acquire the shares of SEAMEC by taking    3rd July, 2001 as the specified date.  Technip has also made  payment of the share consideration together with the interest  thereon to the shareholders of SEAMEC who  accepted the  public offer.  The Tribunal held that the applicable law to the question  as to when control of SEAMEC had been taken over by  Technip, was Indian Law. The Tribunal affirmed SEBI’s  conclusion that the Regulations had been violated by Technip  by its failure to make a public announcement but decided that  the relevant date on which the control of SEAMEC was taken  over by Technip was April, 2000. The Tribunal accordingly  directed Technip to treat the relevant date for calculating the  offer price as 12th April, 2000 and to pay SEAMEC shareholders  the difference between the price of the shares between  3.7.2001 and 12th April, 2000 together with the interest on such  difference at the rate of 15%. One of the grounds on which the  Tribunal came to the conclusion that Technip had taken over  Coflexip in April, 2000 was based on the fact that both the  companies had been promoted by  IFP  and that IFP through  ISIS acting in concert with Technip had brought about the  takeover of Coflexip by Technip. According to Technip, since Technip and Coflexip are  both registered in France and the takeover of Coflexip by  Technip also took place in France, the applicable law is French.  In terms of French Law, according to Technip, there was no  control of Coflexip by Technip in April, 2000 and as such there  was no change in control of SEAMEC on that date  but in July  2001. It is further submitted that in any event Regulation 12 did  not apply to the takeover because SEAMEC was not the target  company and that while taking over Coflexip, Technip neither  had the common objective nor was there any agreement  between Technip and Coflexip with regard to SEAMEC. The  rate of interest has also been challenged. It is said that  although there was no challenge to the rate which was fixed by  SEBI, if the Tribunal’s order is upheld, then the impact of  interest would be much greater.  It is submitted that in any  event, the dividend paid must be adjusted against the interest  claimed.  It is the final submission of Technip that if April 2000  is to be taken as the date of control, then only those  shareholders who were shareholders of SEAMEC on the  specified date and continued as such till the offer was made are  entitled to the benefit of the Tribunal’s order. A separate appeal has been preferred by IFP from the  decision of the Tribunal being CA No.10092/98.  The grievance  of IFP is that it is a professional body created by decree of the  French Government  and has been set up as a centre for  research and industrial development, education, professional  training and information for the oil and gas and automotive  industries in France.  IFP does not carry on any industry or  commercial activities nor does it manage or control any listed  company. It promotes companies to apply the results of its own

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research.  IFP says that an unnecessary stigma has been cast  by the Tribunal’s decision on a Government organization even  though the show cause notice issued by SEBI did not make any  allegation against IFP.   The respondents have on the other hand argued that the  law applicable to SEAMEC was  Indian Law and to determine if  there was a change in the management and control of  SEAMEC the provisions of the Regulations would apply.  In  terms of Regulations 10, 11 and 12 read with Regulation 2, any  person, who acquires shares or voting rights in a registered  company (described as a target company under the  Regulations) above 15% or  acquires control over the target  company is required to make a public announcement offering to  purchase the shares of the other shareholders in the target  company.   It is the submission of the respondents that  according to Indian and French Law de facto control of Coflexip  and therefore SEAMEC was taken over by Technip in April,  2000.  The respondents also claim that Technip had in fact  applied to SEBI to exempt them from the operation of the  Regulations. The application had been rejected.  This issue  according to the respondent could not, therefore be reopened.  It is said that SEAMEC was very much in the contemplation of  Technip when it decided to take over Coflexip.  It is asserted  that therefore Regulations 10,11 and 12 applied in full measure.   Technip had not only acted in concert with ISIS, another  shareholder of Coflexip, but even by itself was in a position to  exercise and in fact exercised control over Coflexip and  therefore SEAMEC in April 2000.   The shareholders of SEAMEC may be classified into  three groups; a)      Those, who were shareholders of  SEAMEC in  April, 2000 and continued as such;

b)        Those, who were not shareholders in April, 2000  but were shareholders during the public offer  having purchased the shares of SEAMEC before  July, 2001.

c)        Those shareholders, who were shareholders on  the date of the public offer holding shares  purchased in April 2000 and more shares after  April, 2000 but before July, 2001.

The respondents who belong to group (b) have said that  the public offer made by Technip after SEBI’s order was  unconditional. It was made to the shareholders who were  shareholders as on the date of the public offer. On the question  of  interest it is said that it was not open to Technip to question  either its liability to pay interest or the rate of interest and that  Technip had already paid interest to the present shareholders  without protest.  Finally it is said that the finding of fact by the  Tribunal should not be interfered with unless this Court came to  the conclusion under Section 15Z of the Act that it was   perverse.   We will start with this final submission. Section 15Z of the  SEBI Act, 1992 allows any person aggrieved by the decision or  the order of the Securities Appellate Tribunal to file an appeal to  the Supreme Court on any question of law arising out of such  order.  Now the primary dispute in this appeal is whether the  impugned transaction is to be judged according to French Law  or Indian Law.  That is a question of law.  Furthermore, the  determination as to what French Law is, is doubtless a question  of fact but it is "a question of fact of a peculiar kind".  As has  been commented in Cheshire and North’s Private International

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Law (12th Edn.) "To describe it (foreign law) as one of fact  is no doubt apposite, in the sense that the  applicable law must be ascertained  according to the evidence of witnesses, yet  there can be no doubt that what is involved  is at bottom a question of law.  This has  been recognized by the courts".                   Admittedly both Coflexip and Technip were incorporated  according to and under the laws of France. They are    therefore ’domiciled’ in France. Normally,  we would resolve  any issue relating to their internal affairs by applying the law of  their domicil, in this case French Law (See: Hazard Brothers &  Co. v. Midland Bank Ltd. 1933 AC 289, 297; Metliss v.  National Bank of Greece & Athens, SA: [1961] AC 255).  But  by that token it is equally true that SEAMEC which was  incorporated in India would be governed by Indian law and  that is what SAT held:  "SEBI has viewed (sic) that since Technip  and Coflexip are French companies,  matters relating to them should be decided  in accordance with French law.  To the said  extent SEBI is correct. SEBI has no  jurisdiction to regulate takeovers and  acquisitions taking place outside India.  But  certainly SEBI has jurisdiction to regulate  substantial acquisition and takeovers of  companies in India".  

But then it came to the conclusion that even the question  "whether Technip acquired control over Coflexip on 12.4.2000  and consequently over SEAMEC need be tested in the light of  2(c)  definition".  In other words Indian law would apply to  determine whether the control of Coflexip was taken over by  Technip.  According to SAT any view to the contrary would  "lead to absurd consequences even defeating the very  objective of the Takeover Regulations". SAT’s conclusion as to the applicable law is questioned  by the appellant and that cannot be considered as a question of  fact.  As held in Dalmia Dairy Industries Ltd. Vs. National  Bank of Pakistan , the role of the appellate Court is such  cases is:

"\005..to examine the evidence of foreign law  which was before the justices and to  decide for ourselves whether that evidence  justifies the conclusion to which they  came ".  

 The respondent’s preliminary objection to the  maintainability of the appeal is accordingly rejected.

The jurisdiction of SEBI or SAT or indeed this Court to  apply foreign law has not been questioned at any stage.  What  is referred to as "private international law" by some authorities   is referred to as conflict of laws by others .  Whatever the  nomenclature, it is based on the ’just disposal of proceedings  having a foreign element’.  To quote from Kuwait Airways  Corp. v. Iraqi Airways Co. (2002) UKHL 19.

"The jurisprudence is founded on the  recognition that in proceedings having

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connections with more than one country an  issue brought before a court in one country  may be more appropriately decided by  reference to the laws of another country even  though those laws are different from the law of  the  forum court."   

We have already said and it must be taken to be a  generally accepted rule of private international law, that  questions of status of a person’s domicile ought in general to be  recognized in other countries unless it is contrary to public  policy.   Questions  of status  of  an   individual  would    include  matters such as legal competence, marriage and  custody.  (See in re Langley’s Settlement Trusts (1962) Ch. 541); Russ v.  Russ (1962) 3 All E.R.; Smt. Surinder Kaur Sandhu v. Harbax  Singh Sandhu: AIR 1984 SC 1224; Oppenheimer v. Cattermole  (1975) 1 All ER 538).   Questions as to the status of a  corporation are to be decided according to the laws of its  domicil or incorporation subject to certain exceptions including  the exception of domestic public policy. This is because "a  corporation is a purely artificial body created by law.  It can act  only in accordance with the law of its creation". Therefore, if it is  a corporation, it can be so only by virtue of the law by which it  was incorporated and  it is to this law alone that all questions  concerning the creation and dissolution of the corporate status  are referred  unless it is contrary to public policy.  [See: In the  matter of American Fibre Chair Seat Corporation. William Daum  et al. v. Arthur J Kinsman  265 N.Y.416; 193 N.E.253;  McDermott Inc. v. Harry Lewis, 531 A.2d 206;  Richard Reid  Rogers v. Guaranty Trust Company of New York ( 288 US 123- 151(S.C.(U.S.) Carl Zeiss Stiftung v. Rayner and Keller Ltd.  (1966)2 ALL ER 536; Gaudiya Mission & Ors. v. Brahmachari &  Ors. 1998 Ch. 341; Kuwait Airways Corp. V. Iraqi Airways Co.  (No. 3) 2002 UKHL 19; Lazard Brothers & Co. v. Midland Bank  Ltd. (1933) AC 289 at 297; Cheshire and North’s Private  International Law (12th Edn.) p.174].  

This general rule regarding determination of status by  the lex incorporationis will not apply when the issue relates to  the discharge of obligations  or assertion of rights by a  corporation in another country whether such obligation is   imposed by or right arises under statute or contract  which is  governed by the law of such other country.  The distinction is brought out in the case of  National  Bank of Greece and Athens S.A. and Metliss: 58 A.C. 509.   A Greek Bank had issued mortgage bonds to persons in U.K.  in pounds sterling.  The bonds were guaranteed by another  bank.  Both the issuing bank and the guaranteeing bank were  incorporated under Greek Law. The guaranteeing bank was  subsequently amalgamated with  a third Greek company and  a new company was formed.  A bond holder sued the new  company seeking to enforce the guarantee. Under the Greek  law there was a moratorium imposed on payments by the new  bank. It was held by the House of Lords that the status of the  new bank would be decided according to the law of the  domicile of the original guarantor company and the new  company which was Greek law.  It was found that according to  Greek law the new company succeeded to the assets and  liabilities of the guarantor company.  The question then was  whether the English Courts would recognize the moratorium  as debarring the bond holder from enforcing his rights under  the bond.  It was not in dispute that the bond was governed by  English law.  It was held that the evidence of the effect of the  Greek moratorium in Greece was therefore irrelevant. "This was an English debt and the obligation

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to pay it, its quantum and the date of payment,  are all governed by English law which will not  give effect to the Greek Moratorium." (pg. 529)

       The claim of the bond holder was accordingly allowed.      Consequent upon the decision of the House of Lords a  new Greek law was passed retrospectively modifying  the  terms of the amalgamation, so that the new bank was no  longer required to discharge the original guarantor’s dues to  the bond holders.  The House of Lords  in Adams vs.  National Bank of Greece S.A. 1961 A.C. 255, 282 again  rejected the new bank’s submission that it was not liable on  the bonds.  It was held that what was sought to be enforced  was not "a Greek right, but a right arising under a contract  under English law". It was held:  

"It is well settled that English law cannot give  effect to a foreign law which discharges an  English liability to pay money in England and  the appellants’ contracts were English  contracts under which they were to be paid in  England".  

Although the law of the Bank’s domicile determined its  status as a debtor, it could not determine the liability of the  defendant on a contract subject expressly to English law. The relationship of Technip to Coflexip whether one of  control or not is really a question of their status.  The applicable  law would therefore be the law of their domicil, namely, French  law. Having determined their status  according to French Law,  the next question as to their obligation under the Indian Law vis  a vis SEAMEC would have to be governed exclusively by  Indian  law   (in this case the Act and the Regulations).   SAT’s  error lay in not differentiating between the two issues of status  and the obligation by reason of the status and in seeking to  cover both under a single system of law.   But, contend the respondents, the French law even if  applicable, was contrary to the Act and Regulations  and is  thereby contrary to the public policy underlying the Indian  enactment. In our view, domestic public policy which can justify  a disregard of the applicable foreign law must relate to basic  principles of morality and justice and the foreign law  amount to  a flagrant or  gross breach of such principles.         As far back as in 1918, Cardozo J, speaking for the  Bench in Fannie F. Loucks  et al., as Administrators of the  Estate of Everett A. Loucks, Deceased, Appellants, V.  Standard Oil Company of New York, Respondent. 224  N.Y.99; said:

"The courts are not free to refuse to enforce a  foreign right at the pleasure of the judges, to  suit the individual notion of expediency or  fairness.  They do not close their doors unless  help would violate some fundamental principle  of justice, some prevalent conception of good  morals, some deep-rooted tradition of the  common weal".

       Similarly the House of Lords in Kuwait Airways Corp. v.  Iraqi Airways Co.(No.3): (2002) UKHL 19 said:         "\005\005Exceptionally and rarely, a  provision of foreign law will be disregarded  when it would lead to a result wholly alien to  fundamental requirements of justice as  administered by an English court".

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       In other words the power to disregard a provision in the  foreign  law must be exercised exceptionally and with the  greatest circumspection "when to do otherwise would affront  basic principles of justice and fairness which the courts seek to  apply in the administration of justice in this country.  Gross  infringements of human rights are one instance, and an  important instance, of such provision". (ibid)         The issue in the latter case arose out of an Iraqi law  which confiscated Kuwaiti aeroplanes and vested them in the  Iraqi Airlines Corporation.  The Court refused to recognize the  Iraqi law because:  "a legislative act by a foreign state which is an  flagrant breach of clearly established rules of  international law ought not to be recognized   by the courts of this country as forming part of  the lex situs of that state".              This Court in Renusagar Power Co. Ltd. Vs. General  Electric Co. 1994 Supp.(1) SCC 644  while construing Section  7 (1) (b) of the Foreign Awards Act which allows Indian Courts  the power to refuse to enforce foreign awards which are  contrary to public policy, has held that:- "\005.defence of public policy which is  permissible under Section 7(1) (b) (ii) should  be construed narrowly\005. It must be held that  the enforcement of a foreign award  would be  refused on the ground that it is contrary to  public policy if such enforcement would be  contrary to (i) fundamental policy of Indian  law; or (ii) the interests of India; or (iii) justice  or morality. (pg.682)

In that case it had been argued  by the appellant that the  expression "public policy" in Section 7(1) (b) (ii) of the Act has  to be construed in a liberal sense and not narrowly and it would  include within its ambit disregard of the provisions of the  Foreign Exchange Regulations Act, 1973. This Court accepted  the argument on the ground that the provisions contained in  FERA have been enacted to safeguard the economic interests  of India and any violation of the said provisions would be  contrary to the public policy of India as envisaged in Section  7(1)(b)(ii) of the Act. However on the facts it was held that the  enforcement of the award would not involve violation of any of  the provisions of FERA and for that reason it not would be  contrary to public policy of India so as to render the award  unenforceable in view of Section 7(1)(b)(ii) of that Act. In a sense all statutes enacted by Parliament or the  States can be said to be part of Indian public policy.  But to  discard a foreign law only because it is contrary to an Indian  statute would defeat the basis of private international law to  which India undisputedly subscribes.[ See: Surinder Kaur  Sandhu v Harbax Singh Sandhu (supra)]. To quote again  from the Kuwait Airways case (supra).

"The laws of the other country may have  adopted solutions, or even basic principles,  rejected by the law of the forum country.   These differences do not in themselves  furnish reasons why the forum court should  decline to apply the foreign law.  On the  contrary, the existence of differences is the  very reason why it may be appropriate for the  forum court to have recourse to the foreign  law.  If the laws of all countries were uniform

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there would be no ’conflict’ of laws".

      The Bhagwati Committee Report on Takeovers (1997)  which was prepared after examining the principles and  practices and the regulatory framework governing takeovers in  as many as fourteen countries noted that while the practice and  procedures vary from country to country, the principles and the  concerns- cardinal among which are equality of opportunity to  all shareholders, protection of minority interest, transparency  and fairness-have remained more or less common. The aim of  French Law like Indian Law is to ensure that all parties to a  public tender offer respect the principles of shareholder  equality, market transparency and integrity, fair trading and fair  competition. All this is culled from the opinions of the experts  relied upon by all the parties. Under Section 45 of the Evidence  Act, 1972, the Court can take the admitted position into  consideration in order to form an opinion as to the text of the  relevant French law. [ See: De Beeche and Ors. Vs. The  South  American Stores (Gath and Chaves Limited and the  Chilian Stores Gath and Chaves Limited) 1934 LR A.C. 148]  

Undisputedly, in April 2000, the relevant law in force in  France   was  Article 355-1 of the French Companies Act 1966  (LOI No.66-537, du 24 Juillet 1966, Sur les Societas  Commerciales).  It read as follows:-

"I.  A company shall be regarded as  controlling another:

(1)     When it directly or indirectly holds a  percentage of the capital conferring  on it the majority of the voting rights  in the general meetings of this  company;

(2)     When it alone holds the majority of  the voting rights in this company  pursuant to an agreement  concluded with other members or  shareholders and which is not   contrary to the interests of the  company;

(3)     When it actually makes, due to the  voting rights which it holds, the  decisions in the general meetings of  this company.

"II.   It shall be presumed to exercise this  control when it directly or indirectly holds a  percentage of the voting rights higher         than   40%    and  when no  other  member or  

shareholder directly or indirectly holds a  percentage higher than its own."

Sub-clauses (1) and (2) of Clause (1) of Article 355-1,  deal with  de jure  acquisition of control by one company of  another.  The third sub-clause deals with de facto control.  All  three sub-sections deal with the position of a company acting

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on its own.   Clause II of Article 355.1 provided for  statutory  presumption of control when the acquiring company directly or  indirectly held more than 40% of the voting rights and was the  largest shareholder.   In May, 2001, Article 355-1 of the 1996 Act was amended  to include the following  Sub-section:-

 "III.         In order to apply the same  sections of this chapter, two or more persons  acting in concert shall be regarded as jointly  controlling another when they actually make,  under an agreement to implement a common  policy, the decisions taken in the general  meetings of the latter."

  Clause III provides for control being acquired by  persons acting in concert under an agreement to implement a  common policy if they actually take decisions in furtherance of  such agreement at general meetings of the "controlled  company". The entire Article was incorporated in the French  Commercial Code as Article  L 233-3 in 2002.  The second relevant Article is Article 356-1.  Roughly  translated it provided:- "Any  individual or legal entity, acting alone or  in  concert,  that  becomes  the  owner  of   a  number of shares representing more than one  twentieth, one tenth, one fifth, one third, one  half or two thirds of the capital or the voting  rights of a company having its registered  office in France and whose shares are  admitted for trading on a regulated market or  are traded on the over-the- counter market as  stated in article 34 of law no.96-597 dated  July 2nd, 1996 relating to the modernization of  financial activities, shall inform such company  in a period of 15 days as of the crossing  upwards of the threshold of the total number  of shares that such person holds.

The owner also informs the Conceil de  Marches Financiers (CMF) within a period of 5  trading days as of the day of crossing  upwards of the threshold when the shares are  listed on a regulated market.  The CMF makes  public such information.

The notifications referred to in the two  proceeding paragraphs are also to be  provided in the same period when the equity  interest falls below the thresholds provided in  the first paragraph.

The owner who is required to disclose the  information in accordance with the first  paragraph above specifies the number of  securities that it possesses giving access to  the capital of the company as well as the  voting rights attached thereto.

The by-laws of the company can provide for  additional disclosure obligations relating to  holdings of fractions of the capital or voting  rights that are less than the one-twentieth

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mentioned in the preceding paragraph.  The  obligation relates to holding each such  fraction, which cannot be less than 0.5% of  the capital or voting rights.

In the event of a failure to satisfy the  disclosure obligations mentioned in the  preceding paragraph, the by-laws of the  company may stipulate that the provisions of  the first two paragraphs of article 356-4 shall  apply only if requested and duly recorded in  the minutes of the general meeting, by one or  more shareholders holding a fraction of the  capital or the voting rights of the issuing  company at least equal to the smallest fraction  of the capital held which must be declared.   This percentage shall nevertheless not be  greater than 5%.

The owner who is required to disclose  according to the first paragraph must declare  upon exceeding the thresholds of one tenth or  one fifth of the capital or the voting rights the  objectives that he intends to pursue over the  coming twelve months.  This declaration shall  state whether the acquirer is acting alone or in  concert, whether he intends to make further  purchases, whether he intends to acquire  control of the company, and whether he  intends to seek his appointment or that of one  or more other persons to the board of  directors, management committee or  surveillance committee.  It is sent to the  company whose shares have been acquired  and to the CMF who publishes it, and to the  Commission des Operations de Bourse  (COB), within fifteen trading days of  surpassing the threshold.  Should those  intentions change, and this is admissible only  in the event of substantial changes in the  environment, the financial situation or the  shareholder base of the persons concerned, a  new declaration must be made and published  in the same way.

The last paragraph of Section 356-I  provides that, upon  crossing the thresholds of 10% of share capital or voting rights  in the target company, and again of 20% of share capital or  voting rights in the target company, the purchaser is required to  file with the Stock Exchange Authorities, with copy to the target  company, a Statement of Intent, specifying (i) whether the  purchaser acts alone or in concert with third parties, (ii) whether  the purchaser intends to continue acquiring shares in the target  company, (iii) whether the purchaser intends to acquire control  of the target company and (iv), whether the purchaser intends  to seek representation on the Board of Directors of the target.  The Section has been re-enacted  as L 233-7 of the  2002, French Commercial Code. Therefore, French Law at the relevant time provided that  a company holds control over another (the Target Company)  in the following cases. (i)     the Company holds, directly or  indirectly, title to a number of shares  granting to such holder a majority of  voting rights in the general meetings of

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shareholders of the Target.

(ii)    the Company holds the majority of  voting rights in the Target pursuant to  an agreement with a third party or as  a result of acting in concert with such  third party.

(iii)   the Company in effect determines,  through the votes it holds, the  decisions taken in the general  meetings of shareholders of the  Target (what is known as ’de facto’  control).

The Stock Exchange authorities in France are the Conceil  des Marches Financiers or the French Financial Markets  Authority (referred to as the ’CMF’) and the Commission des  Operations de Bourse viz. the French Stock Exchange  Authority (referred to as the ’COB’).  They are regulatory bodies  with powers of inspection, supervision and disciplinary action.   The supervisory role of CMF is itself subject to the  Commission  Bancaire or the French Banking Commission and the COB.  Article 1 and Article 2 of Decree No. 96-869 dated October 3,  1996 also provide for appeals from the decisions taken by the  CMF before the Paris Courts of Appeals.  Article 33 of Chapter- I Title-II provides that the CMF shall set forth the Rules  governing public offers including the conditions under which a  natural or legal person, acting alone or in concert within the  meaning of Article 356-1-3 of Law 66-37 dated July 24, 1966  aforesaid and who directly or indirectly comes to hold a certain  percentage of the capital stock or voting rights in a company  whose shares are traded on a regulated market to forthwith  inform the CMF and file a proposed tender offer with a view to  acquiring a specified quantity of the company’s securities.  If  this filing is not made, the securities that the person holds in  excess of the aforementioned percentage of the capital stock or  voting rights shall be deprived of voting rights.                   The provisions in French law     relating to takeovers as we  see them are, therefore, rigorous. The Indian law is no less  rigorous and differs only marginally with the French law on the  subject.                  The three relevant Regulations which were alleged to  have been violated by Technip are Regulations 10,11 and 12.  Regulations 10,11 and 12 are contained in Chapter III of the  Regulations which deals with substantial acquisition of shares  or voting rights in and acquisition of control over a listed  company:- "10.   No acquirer shall acquire shares or  voting rights which  (taken together  with  shares or voting rights  if any, held by him or  by persons acting in concert with him), entitle  such acquirer or exercise fifteen percent or  more of the voting right in a company, unless  such acquirer  makes a public announcement   to acquire shares of such company in  accordance with the Regulations.

11(1)  No acquirer who, together with persons  acting in concert with him, has acquired,  in  accordance with the provisions of law, not less  than 15% not more than 75% of the shares or  voting rights in a company, shall acquire either  by himself or through or with persons acting in

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concert with him,   additional shares or voting  rights entitling him to exercise more than 2%  of the voting rights, in any period of 12  months, unless such acquirer makes a public  announcement to acquire shares in  accordance with the Regulations.

(2) No acquirer shall acquire shares or voting  rights which (taken together with shares or  voting rights, if any, held by him or by persons  acting in concert with him), entitle such  acquirer to exercise more than 51% of the  voting rights in a company, unless  such  acquirer makes a public announcement to  acquire share of such company in accordance  with the Regulations.

Explanation: For the purposes of Regulation  10 and Regulation 11, acquisition shall mean  and include;

(b)     direct acquisition in a listed company to  which the Regulations apply; (c)     indirect acquisition by virtue of acquisition  of holding companies, whether listed or  unlisted, whether in India or abroad.

12.     Irrespective of whether or not there has  been any acquisition of shares or voting  rights in a company, no acquirer shall  acquire control over the target company,  unless such person makes a public  announcement to acquire shares and  acquires such shares in accordance with  the Regulations.

Explanation.

Where any person or persons has given  joint control, such control shall not be  deemed to be a change in control so  long as the control given is equal as the  control given is equal to or less than the  control exercises by person(s) presently  having control over the company."                  The difference between the French law and their  regulations relates to the prescribed limits of share holding for  control by one company over another. This cannot  conceivably make the French law violative of any public policy  underlying the Acts and Regulations so as to persuade us to  disregard the French Law.          Thus it is the French law which we must apply to decide  whether Technip took over the control of Coflexip in April 2000  or July 2001. Incidentally, the opinions of various persons  claiming to be experts in French Commercial Law have  expressed diametrically opposing views as to whether Technip  could be said to have taken control of Coflexip applying the   relevant French law, in April 2000.  We do not propose to rely  upon either of the views expressed as none of them was  subjected to cross examination.  According to Technip their  expert affirmed an affidavit and was offered for cross  examination by SEBI and that SEBI declined to do so. But the  affidavit unlike the opinion expressed by the same firm earlier to  Technip on 15th November 2001 did not express any opinion as

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to whether Technip did or did not acquire control of Coflexip  either in April or July 2001 but only gave evidence of the  applicable French law and highlighted the consequences of  failure to comply with the statement of intent which was  required to be filed with CMF.   Therefore, ultimately  it is for  this Court to resolve the conflict by looking at the admitted text  of the French law  and the material on record to decide the  proper application of the provisions. According to the show  cause notice issued by SEBI to Technip, Technip had acquired  control of Coflexip by acting in concert with ISIS. Technip has  said that in April, 2000  there was no concept of acting in  concert under French Law since the extended meaning of  ’controlled company’ was introduced by amendment to Article  355-1 only in May, 2001.  The submission ignores Article 356-1.   The concept of a takeover by acting in concert was there in  2000.  In fact Article 355-1 of the French Companies Act merely  sets out factors determining when a company could be said to  hold control over another.  It does not, as Article 356.1 does,  speak of the method for acquiring such control.         At this stage and before we apply the law to the facts we  may note one aspect that has been lost sight of by SAT and  that is that irrespective of the status of Coflexip and Technip to  each other, in order to trigger Regulations  10 to 12, it would  have to be established that the purchase of the 29.68%  shares by Technip in Coflexip was with the object of taking  control of SEAMEC. That is what the relevant Regulations  provide and also what is alleged in the Show Cause Notice  issued to Technip by SEBI.  The allegation in the show cause  notice was that Technip, the acquirer and ISIS as a  shareholder of Coflexip acted in concert to acquire control  over Coflexip and therefore SEAMEC treating SEAMEC as  the target company. The emphasis is on the target company  whether the case is of direct or indirect acquisition under the  Regulations.  Thus Regulation 2(b) of the Regulations defines  ’acquirer’ as meaning any person who, directly or indirectly,  acquires or agrees to acquire shares or voting rights in the  target company and ’acquirer’ also means a person who  acquire or agrees to acquire control over the target company  either by himself or with any person acting in concert with the  acquirer. The word ’control’ has been defined in Regulation 2(c) in  the following manner: "control" shall include the right to  appoint majority of the directors or to  control the management or policy  decisions exercisable by a person or  persons acting individually or in concert,  directly or indirectly, including by virtue  of their shareholding or management  rights or shareholders agreements or  voting agreements or in any other  manner".

 The other definition which  is relevant is Regulation 2(e)  defining the phrase ’person acting in concert’.  We are  concerned with sub section (i) which says that it comprises  "persons who, for a common objective or purpose of substantial  acquisition of shares or voting rights or gaining control over the  target company, pursuant to an agreement or understanding  (formal or informal), directly or indirectly co-operate by  acquiring or agreeing to acquire shares or voting rights in the  target company or control over the target company". Finally is  the definition of the word ’target company’ in Regulation 2(o) as  meaning a listed company whose shares or voting rights or

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control is directly or indirectly acquired or is being acquired. If  the Indian Law were  to be invoked in April 2000 it would have  to be shown that Technip acquired or agreed to acquire the  right to control SEAMEC ( in this case the alleged target  company) either by itself or acting in concert with any other  shareholder or Coflexip.  According to the Bhagwati Committee Report to be acting  in concert with an acquirer, persons must fulfill certain ’bright  line’ tests.  They must have commonality of objectives and a  community of interest and their act of acquiring the shares or  voting rights in company must serve this common objective.   The commonality of objective which should be established  between the acquirer and a shareholder in order to trigger off  Regulations 10,11 and 12 with respect to a subsidiary company  is referred to as the "chain principle" in the Report which  enunciates that  an offer should be made to the shareholders of   such a target company if (a)     the shareholding in the second company  constitutes a substantial part of the assets  of the first company; or

(b)     one of the main purposes of acquiring  control of the first company was to secure  control of the second company. This is evident also reading the definitions of ’acquirer’  ’control’ ’acting in concert’ and ’target company’ in Regulations  2 (b)(c) (e) and (o) together. A similar position obtains in England where Note 7 to  Rule 9.1 of the City Code on Takeovers and Mergers likewise  provides:- "Occasionally, a person or group of  persons requiring statutory control of a  company (which need not be a company  to which the Code applies) will thereby  acquire or consolidate control, as  defined in the Code, of a second  company because the first company  itself holds a controlling block of shares  in the second company, or holds shares  which, when aggregated with those  already held by the person or group,  secure or consolidate control of the  second company.  The Panel will not  normally require an offer to be made  under this Rule in these circumstances  unless either:

a)      the shareholding in the second  company constitutes a  substantial part of the assets of  the first company; or

b)       one of the main purposes of  acquiring control of the first  company was to secure control  of the second company".

The "second company" both under the ’chain principle’  referred to in the Bhagwati Committee Report as well as in the  City Code on Takeovers and Mergers is the target company  and the first company is the medium or vessel or vehicle for  attaining control on the target company. In the present case  Coflexip would be the ’first company’ and SEAMEC the actual  target and the liability to make an exit offer to the shareholders

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of SEAMEC would arise only if either one of the two conditions  prescribed is fulfilled. It would therefore have to be proved by  the shareholders of SEAMEC that Coflexip was taken over (if at  all) in April 2000 by Technip with the assistance of ISIS so that  control of SEAMEC could  be obtained or that Coflexip’s  shareholding of SEAMEC constituted a substantial part of  Coflexip’s assets. The standard of proof required to establish such concert  is one of probability and may be established "if having regard to  their relation etc., their conduct, and their common interest, that  it may be inferred that they must be acting together: evidence of  

actual concerted acting is normally difficult to obtain, and is not  insisted upon" .  While deciding whether a company was one in  which the public were substantially interested within the  meaning of Section 23A of the Income Tax Act, 1922 this Court  said:- "The test is not whether they have  actually acted in concert but whether the  circumstances are such that human  experience tells us that it can safely be  taken  that they must be acting together.   It is not necessary to state the kind of  evidence that will prove such concerted  actings.  Each case must necessarily be  decided on its own facts ".  

In Guinness PLC and Distillers Company PLC the  question before the Takeover Panel was whether Guinness had  acted in concert with Pipetec when Pipetec  purchased shares  in Distillers Company PLC.  Various factors were taken into  consideration to conclude that Guinness had acted in concert  with Pipetec to get control over Distillers Company. The Panel  said :- "The nature of acting in concert requires  that the definition be drawn in deliberately  wide terms.  It covers an understanding  as well as an agreement, and an informal  as well as a formal arrangement, which  leads to co-operation to purchase shares  to acquire control of a company.  This is  necessary, as such arrangements are  often informal, and the understanding  may arise from a hint.  The understanding  may be tacit, and the definition covers  situations where the parties act on the  basis of a "nod or a wink"\005..  Unless  persons declare this agreement or  understanding, there is rarely direct  evidence of action in concert, and the  Panel must draw on its experience and  commonsense to determine whether  those involved in any dealings have some  form of understanding and are acting in  co-operation with each other ".

According to the Dictionaire Permanent du Droit des  Affairs French law does not make proof of the concerted  action dependant upon the existence of a written document.   "However, given the serious consequences linked to the  existence of a concerted action, only serious presumptions  drawn from factual date can lead to a qualification of a  concerted action.  The mere observation of similarity of  behaviours cannot constitute such a proof. Even the common

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position of certain shareholders is not necessarily indicative of  the existence of a concerted action.  Such shareholders may  have adopted legitimately a similar position, independently,  because of their own strategic interest". (Extract from the 1989  French Securities and Exchange Commission Report). In this background of the law we may consider briefly  the relevant facts.  IFP had promoted Technip and Coflexip  in 1958 and  1971 respectively.  In 1975 IFP promoted ISIS as a wholly  owned subsidiary to hold its investments. It is the admitted  position that IFP retained majority control of ISIS until  October,2001. The main shareholders of Technip at all material times  were ISIS, Gaz de France and Sogerap (which later came to be  known as Fina Total Elf and is hereafter referred to as ’Elf’).  They held 11.8%, 10.9% and 6.4% of the shareholding whereas  65.9% of the shareholding was held by the public.  In 1994  ISIS, Gaz de France, Elf and Technip entered into an  agreement inter alia granting a right of preemption  to each  other in respect of their respective shareholdings. The shareholders of Coflexip till April 2000 were ISIS, Elf  and Stena (incorporated in the Netherlands), apart from  American investors  who  held 50% of the shareholding.  The  first three shareholders had entered into a similar shareholders  agreement with a right of preemption.   Coflexip through a chain of subsidiaries purchased   49.85% of the shareholding in SEAMEC on 25th October, 1999. In December, 1999, the Chairman CEO of Coflexip made  a proposal to the Chairman/CEO of Technip to examine the  merits of a merger between Coflexip and Technip. In January,  2000 Stena intimated that it would not support  a merger of  Coflexip and Technip as it was not part of Stena’s strategy to  hold an equity stake in an engineering and construction  company.   On 31st March, 2000, Stena offered to sell its shares in  Coflexip held by it and its associates J.P. Morgan, being 29.7%  of the shareholding of Coflexip, to Technip. ISIS had three representatives on Coflexip’s Board of 11  Directors, who also had two Directors in Technip. On 7th April, 2000, the Board of Technip approved the  deal with Stena to purchase its 29.68% shares in Coflexip. ISIS  and Elf abstained from voting as they were shareholders in both  Coflexip and Technip. On 11th April, 2000, several events took place. ISIS wrote  a letter to Stena renouncing its preemptive rights under the  shareholders agreement in favour of Technip.  There is no  binding that it would have been financially  possible for ISIS to  have exercised its preemptive rights given the financial  implications particularly the necessity to make a further public  offer to purchase the balance shares of Coflexip as it would  have crossed the threshold as prescribed under French Law.  On the same date Elf also renounced its preemptive rights  under the shareholders agreement in favour of Technip.  An  agreement was then entered into between Technip and Stena  for the acquisition of Stena’s 29.68% shares in Coflexip at the  rate of Euros 119 per share. Statements of intent were filed by  Technip with Stock Exchange Authorities and with Coflexip.  Coflexip in turn wrote a letter to Technip on the same date  agreeing not to acquire equity shares in a competing company  without prior written consent of Technip.  The declaration required by French law was made to the  CMF by Technip on 28th April, 2000 that Technip. a)      did not directly or indirectly hold any other shares  in Coflexip;

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b)      it was not acting in concert with any other and  had no plans for any such action;

c)      it had no intention to increase its equity stake  within 12 months after acquisition;

d)      undertaking not to acquire new equity shares in  other companies involved in Coflexip’s scope of  activities except with the prior written approval of  Coflexip;

e)      agreeing that violation of any of the aforesaid  stipulation would entitle Coflexip to claim  damages.

           This was published by CMF on 4th May, 2000. A  similar declaration or statement of intent was given to COB.        Both the authorities accepted the declaration and there was no  protest to the publication by any member of Coflexip or anyone  else for that matter.  There is thus no dispute that Technip  agreed to acquire 29.68% shares in Coflexip on 11.4.2000. Nor  is it disputed that it complied with the requirements of Art 356-1.      Clearly a purchase of 29.68% shares in a company would  not by itself give the purchase de jure control of the company  under French Law. The acceptance of the statement of intent  filed by Technip before the Stock Exchange Authorities would  not however be conclusive of the matter. It may be that the  Market Authorities agree to the publication of a statement or a  notice or a financial publication. It may also be that those  professional independent bodies have professionally verified  the contents of such communications and have been satisfied  with their accuracy.  However, there is no adjudicatory process  and there was no judicial decision of any authority which we  could recognize as a foreign judgment on any principle of  judicial comity or conflict of laws.  To return to the narration of  facts:- On the same date i.e. 11th April 2000 three appointees of  Technip were co-opted on the Board of Coflexip.  According to  Technip there was in fact no change in the daily management  of Coflexip.  Coflexip’s Board of Directors consisted  of eleven  Directors, of which Technip’s Directors were only three. The  President of  the  Board  and the Managing Director continued  to be the  same.  The respondents have argued  that  there   was in  fact  an   effective   change   in  the management.  Of  the 11 Directors  of  Coflexip, three belonged  to ISIS.  Therefore, ISIS and   Technip  together had a total of six out of  the eleven Directors on Coflexip’s   Board.  Additionally,  Technip’s Directors were appointed to the Strategic Committee  as well as the Audit Committee of the Board. The respondents  point out that all these appointments were made even before  payment of the purchase price of the shares by Technip to  Stena. The purchase of shares between Stena and Technip  was completed on 19th April, 2000, on which date and Stena’s  29.68% shares in Coflexip was registered in favour of Technip. Technip has argued  that the effect of the purchase of the  Stena’s shares was merely a strategic alliance between  Coflexip and Technip and Technip did not control Coflexip.      On the other hand there was evidence of a possible acquisition  of Technip by Coflexip. This position continued till  January,  2001 when IFP agreed to sell its entire interest in ISIS to  Technip. According to Technip and IFP this was the first time   IFP had come into the picture.   In February, 2001 the Chairman of Coflexip expressed  his reservation about the  proposed sale of ISIS’s shares in

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Coflexip to Technip.  Coflexip continued to act independently of  Technip with regard to various policy decisions. Technip offered  to purchase the balance shares of Coflexip at a premium of  25% on 3rd July, 2001.  The price offered by Technip was not  immediately acceptable  to the Board of Coflexip.  A Special  Committee was set up to consider whether the price was  adequate.  ISIS voted in favour of setting up of the committee.   As it happened, the Special Committee recommended a higher  price, so that the Technip had to improve its offer to purchase  Coflexip’s share. These facts according to Technip showed that  ISIS was not acting in concert with Technip.  Technip has said that the purchase of 100%  shareholding was duly approved by  Regulatory Authorities of  USA, Finland and Netherlands and on 11th October, 2001  Technip acquired control of 99.04% of the share capital of  ISIS and 98.36% of the share capital of Coflexip. Coflexip’s  shares were registered in the name of Technip on 19th  October, 2001.           We are of the opinion that having regard to the balance of  probabilities there was no evidence that  Technip obtained de facto  control of Coflexip in April 2000.  The evidence would rather suggest  that it was nothing more than a strategic alliance.  The mere fact that  in two Annual General Meetings of Coflexip Technip was in the  majority cannot by itself establish its control over Coflexip. It may be  that in a company with a large and dispersed membership, a  comparatively small proportion of the total shares, if held in one hand,  may enable actual control to be exercised.   But the obtaining of a  majority in a shareholders’ meeting may have been the outcome of  absenteeism or some other factor. It is not as if Technip exerted its  influence over any policy matters of Coflexip.  Besides this was not  the case in the Show Cause Notice.  The allegation was that ISIS and  Technip acted  in concert in the matter of purchase of Stena’s shares   in Coflexip by Technip.  That has not been established.               Technip’s explanation for ISIS not exercising its  preemptive right  under the  shareholders   agreement    is     plausible.     The explanation  was  that  ISIS  was  a   subsidiary    of  IFP and it is not the policy of IFP to manage companies in  which it invests.  ISIS therefore was not interested in acquiring  further shares in Coflexip nor did it have the financial means to  do so.  ISIS was a Government controlled company and was  holding shares on behalf of IFP, a Government body, and its  failure to exercise its rights of preemption could be a  Government decision should IFP have caused ISIS to proceed  with such a huge investment, it could have been in breach of  the relevant EU regulations as intervention of the State in  Private Industry.   In any event there is no evidence  that Technip acquired  Coflexip if it at all did so in April 2000, so as to gain control of  SEAMEC. Yet that is the aspect with which we are concerned.  SEBI said that on the material before it, it was difficult to hold  that IFP along with ISIS was acting in concert with Technip for  the purpose of acquiring shares/voting rights/control of Coflexip  so as to indirectly acquire  control over SEAMEC in April 2000.   But in view of the admitted takeover of Coflexip by Technip in  July 2001 directed the publication of an offer to SEAMEC’s  taking that as the effective date.  In reversing this judgment, SAT held that ISIS and  Technip had acted in concert to gain control over Coflexip in  April, 2000.  We are of the opinion that the approach of the SAT  was entirely wrong. For the purposes of determining Technip’s  obligations under the Regulation it should have addressed itself  as SEBI had done to the question whether ISIS and Technip  were acting in concert to obtain control over the target  company, namely, SEAMEC.  In other words, did the  shareholding of Coflexip in SEAMEC constitute a substantial

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part of the assets of Coflexip, or was the main purpose of  acquiring  control of  Coflexip the acquisition of control over  SEAMEC? According to the SAT, the reasons which established that  ISIS and Technip were acting in concert  in April 2000 were as  follows:  (i) "\005 there was shareholders agreement  dated 2.11.1994 between Stena group on  one side and ISIS and others on the other  to control Coflexip\005\005\005\005.It is also noted  

that ISIS group had not exercised its  preemptive right to block Technip’s entry."

(ii)"\005\005(it was clear)from the shareholding  pattern of Technip, Coflexip and ISIS that  IFP was having common interest."

(iii)"Whether these companies belonged to  one "group" or that they were companies  under the same management" may be in  dispute.  But no one can dispute that they  belonged to one family in the real  sense\005\005..ISIS and IFP had one lineage    - the common parenthood in IFP\005\005\005.  \005\005\005.Gaz de France and Total Fina Elf- both associated with IFP family."

(iv)" Coflexip and Technip are having  interest in the Petroleum sector, IPF could  be interested in these 2 entities joining  together and forming a combine and that  having regard to their common interest, it  may be inferred that they must be acting  together."  

(v)"Technip Chairman’s letter that they  were ultimately planning to take over  Coflexip and they "were on this merger,  passing  through a number of necessary  stages: which included "the acquisition of  30% of Coflexip in April 2000\005"  

(vi) "ISIS has its nominees on the Board of  Technip. ISIS has its nominees of Coflexip.  \005\005\005.\005.Thus in a 11 member Board of  Coflexip Technip ISIS combine had a  majority."

(vii)"From the material available on record  there is every justification to infer that the  plan was to combine Technip and Coflexip  and form a strong combined entity to be a  business leader in the petroleum sector  and that it was with this end in view  Technip in which ISIS had interest acquired  Coflexip in which also ISIS had interest."  

(viii)"\005 total holding of these two  companies were around 47% sufficient  enough to control Coflexip in view of its  48% shares widely held by public.  It is also  noted that in fact in the annual general

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meeting of Coflexip held in May 2000 and  May 2001(before the merger effected on  3.7.2001) Technip had exercised 54% and  57% of the voting rights, that this itself is  indicative of the fact that Technip had more  than 50% voting rights at its command,  even though on record it was holding only  29%."  

(ix)"ISIS objecting to the setting up of a  committee to revise the offer price, is but  natural as an increase in offer price was to  its advantage and by doing so it was not in  any way acting against its objective of  helping Technip to acquire control over  Coflexip. Adding a little more financial  burden on Technip by asking for higher  offer price can not be viewed as a hostile  action from ISIS or as evidence of non co- operation."  

(x)"Technip possibly wanted to strengthen  its position dejure as well with 99% and  they acquired shares to that level through  the public offer in July, 2001. In my view  the acquisition  raising  the  shareholding to  

99% in Coflexip was the final act whereas  the process started on 12.4.2000."

(xi)" \005in my view Technip had decided to  take over control of Coflexip and to achieve  the said objective, acquired  29.68%  shares of Coflexip on 12.4.2000.  the  evidence before me leads to the conclusion  that ISIS had acted in concert for the said  purpose."  

       We need not go into the reasons separately although we  must say that we disapprove of the introduction of the concept  of a joint family into corporate law when the statutory  provisions, particularly Regulation 2(e) exhaustively defines  what would amount to  ’acting in concert’.   More particularly  when Regulation 3(1)(e)(i) provides that:- (1)   "Nothing contained  in Regulations 10,11 and 12  of  Regulations 10,11 and 12 these Regulations  shall apply to;

       (e)  Interse transfer of shares amongst:-

(i) group companies, coming within the       definition of group as defined in the  Monopolies and Restrictive Trade  Practices Act, 1969 (25 of 1969)".

      The ’IFP family’ if any would be nothing more than such a  group. Furthermore, it is abundantly clear that even the name of  SEAMEC does not feature in any of the several reasons put  forward by SAT whereas that, as we must emphasise, should  have been the primary point of focus.  The respondents have  sought to adduce further evidence before us to the effect that  SEAMEC was in the contemplation of Technip when it  purchased Stena’s shares in Coflexip.  There is no question of  allowing any fresh evidence to be adduced at this stage.  

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Besides we do not think that any evidence of mere  contemplation of SEAMEC’s assets would do.  That should  have been the principal objective in order to trigger the  Regulations as it was not the respondent’s case before SAT  that the shareholding of Coflexip in SEAMEC constituted a  substantial part of the assets of Coflexip nor has SAT so found.   SEBI had noted that the takeover of SEAMEC was only an  incidental fall out of the control of Coflexip and that SEAMEC  formed a ’small and insignificant portion of the total business of  Coflexip’ contributing merely 2% of the total asset base of  Coflexip as on December, 2000. The finding was not reversed  by SAT.         We are thus of the opinion that SEBI’s order must prevail  and the order of SAT must be set aside.  The other issues as to  the rate of interest, the adjustment of dividend and the  identification of the shareholders of SEAMEC would arise only if  SAT’s order had been upheld.  As we are allowing the appeals  of both Technip and IFP it is unnecessary to determine them.         Consequent upon our decision to allow the appeals the  bank guarantees furnished by Technip to secure the difference  in amounts between the share prices which would be payable  by Technip had SAT’s view prevailed must be and are hereby  discharged.         The appeals are for these reasons allowed without costs.