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Bombay HC adjourns hearing against Chhabria's acquisition of Herbertsons' equity

The Bombay high court on Tuesday adjourned hearing on a petition challenging the acquisition of shares in liquor major Herbertsons Limited by the vice-chairman of the company, Kishore Chhabria, through some front companies.

Justice S S Nijjar of the court passed the order: ''The notice of motion be removed from the board and the parties are at liberty to move before the chief justice.''

Consequently, a fresh date will now have to be obtained for the hearing after the chief justice appoints another judge.

The petition filed by Magunta Srinivasulu Reddy, who is a close associate of Herbertsons' chairman Vijay Mallya, against Chhabria and his companies, alleges that all shares acquired by them beyond 26 per cent stake in the company were in violation of the Securities and Exchange Board of India takeover code.

Chhabria was given the 26 per cent shareholding in Herbertsons by Mallya in return of bringing BDA Limited into the company's fold as a 100 per cent subsidiary. However, subsequently, Chhabria acquired shares beyond this limit from the open market through his front companies. The Chhabria group now claims that they enjoy a majority holding in the company.

In response to Chhabria's acquistion, Reddy filed an urgent notice of petition in the high court. The judge passed ad-interim orders stating that the votes (including disputed votes) cast in respect of resolutions at the annual general meeting of the company which was held on December 30, 1998 relating to removal of Mallya as the chairman and five other directors be kept in separate covers and handed over to the court-appointed officer and not counted until further orders.

SEBI, which is investigating the acquisition of shares, issued show-cause notices to both the Mallya and Chhabia groups in January for violation of the takeover code.

Mallya has asked for a personal hearing with the SEBI while Chhabria has asked the capital market regulator ''to refrain from taking any decision on the group's alleged violation of the takeover code, as the matter is sub-judice pending a Bombay high court hearing''.

Meanwhile, the Company Law Board has appointed an observer for board meetings of BDA Limited controlled by Chhabria. The Mallya camp alleges that appointment of U K Ganguli, who resigned as managing director of the BDA on December 31, 1998, as vice-chairman and J C Vohra as director, took place in spite of objections by Herbertsons' nominees.

The next hearing on the state of affairs of BDA Limited is coming up before the CLB on February 23-24.

UNI

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