2002 (5) TMI 803 - HC - Companies Law

Summary

Issues:
1. Interpretation of interim orders passed by the Supreme Court regarding acquisition of shares in a company.
2. Seeking modification in the order to allow bidding and purchase of shares held by a third party to prevent destabilization of control and management.
3. Application of SEBI Takeover Code in the context of acquiring a significant percentage of equity shares in a company.
4. Financial constraints faced by one of the parties affecting their ability to acquire shares and discharge liabilities.
5. Concerns regarding maintaining control and management of the company amidst potential changes in shareholding.

Analysis:
1. The judgment involves interpreting interim orders issued by the Supreme Court regarding the acquisition of shares in a company. The orders restrained both parties from acquiring further shares directly or indirectly to maintain the control and management of different divisions within the company. The parties were given liberty to apply for variations based on changing circumstances.

2. The plaintiff sought modification in the order to allow bidding and purchase of shares held by a third party to prevent destabilization of control and management. This request was made to prevent a third party from acquiring a significant percentage of shares, potentially leading to a change in control of the company.

3. The application of the SEBI Takeover Code was considered concerning the acquisition of a substantial percentage of equity shares in the company. The Code mandates making a public offer if a person acquires more than 15% of the equity share capital, which could impact the overall control and management of the company.

4. Financial constraints faced by one of the parties, defendant No. 2, were highlighted, affecting their ability to acquire shares and discharge existing liabilities towards financial institutions and banks. This constraint posed a challenge in maintaining control and stability within the company.

5. The judgment addressed concerns regarding maintaining control and management of the company amidst potential changes in shareholding. The court allowed the plaintiff to purchase shares of a third party subject to specific conditions to prevent destabilization of the status quo and ensure compliance with the Supreme Court's order regarding control and management of different divisions within the company.