2005 (5) TMI 329 - SC - Companies Law

Whether Technip acquired control of SEAMEC through Coflexip in April 2000 or in July 2001? Held that - 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. Thus SEBI s order must prevail and the order of SAT must be set aside

Issues Involved:
1. Determination of the date when Technip acquired control of SEAMEC.
2. Applicability of French or Indian law to the takeover.
3. Compliance with SEBI Regulations by Technip.
4. Liability to make a public offer and the calculation of the offer price.
5. Rate of interest on delayed public announcement.
6. Entitlement of SEAMEC shareholders to the offer benefits.
7. Allegations against IFP and its role in the takeover.

Detailed Analysis:

1. Determination of the Date When Technip Acquired Control of SEAMEC:
The primary issue was whether Technip acquired control of SEAMEC through Coflexip in April 2000 or July 2001. SEBI initially determined that Technip acquired control in July 2001, while the Securities Appellate Tribunal (SAT) concluded it was in April 2000. SEBI's decision was based on the application of French law, while SAT applied Indian law.

2. Applicability of French or Indian Law to the Takeover:
The judgment emphasized that the relationship between Technip and Coflexip, both French companies, should be governed by French law. However, SEBI has jurisdiction over the acquisition of SEAMEC, an Indian company, under Indian law. The Supreme Court clarified that the status of Technip and Coflexip should be determined by French law, but their obligations concerning SEAMEC would be governed by Indian law.

3. Compliance with SEBI Regulations by Technip:
Technip was found to have violated Regulations 10 and 12 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, by acquiring control of SEAMEC without making a public announcement. The Supreme Court noted that SEBI had correctly interpreted the regulations and that Technip's acquisition of Coflexip indirectly led to control over SEAMEC.

4. Liability to Make a Public Offer and the Calculation of the Offer Price:
Technip was directed by SEBI to make a public announcement to acquire SEAMEC shares, taking July 3, 2001, as the specified date for calculating the offer price. SAT, however, directed Technip to consider April 12, 2000, as the relevant date, resulting in a higher offer price. The Supreme Court ultimately upheld SEBI's decision, noting that the evidence did not support that Technip acquired control of Coflexip in April 2000.

5. Rate of Interest on Delayed Public Announcement:
SEBI had directed Technip to pay interest at 15% per annum to SEAMEC shareholders for the delayed public announcement. Technip challenged this rate, but the Supreme Court did not find it necessary to address this issue as it upheld SEBI's order.

6. Entitlement of SEAMEC Shareholders to the Offer Benefits:
The judgment categorized SEAMEC shareholders into three groups: those holding shares since April 2000, those who acquired shares before July 2001, and those who bought shares between these dates. The Supreme Court did not delve into the specifics of which shareholders were entitled to benefits since it upheld SEBI's order.

7. Allegations Against IFP and Its Role in the Takeover:
IFP, a professional body created by the French Government, filed a separate appeal against SAT's decision, arguing that it had been unnecessarily stigmatized. The Supreme Court acknowledged IFP's role and cleared it of any allegations, noting that SEBI's show-cause notice did not implicate IFP.

Conclusion:
The Supreme Court set aside the SAT's order and upheld SEBI's decision, confirming that Technip acquired control of SEAMEC in July 2001 and not April 2000. The appeals by Technip and IFP were allowed, and the bank guarantees furnished by Technip were discharged. The judgment emphasized the application of French law to determine the status of Technip and Coflexip and Indian law for their obligations concerning SEAMEC.

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