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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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 21

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.