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By its reply dated 4-6-2001, the SEBI asserted that Modipon Ltd. was a person deemed to be acting in concert with the acquirers, and also forming part of the promoters group, and that the offer was made by the " promoters of MRL for consolidation in terms of Regulation 11 (1). In these circumstances, Modipon Ltd. could not be included in the public category for the captioned offer, and, therefore, was not eligible to participate in the captioned offer in terms of the Regulations.

8. At this stage, we may notice the proceedings in the suit before the Delhi High Court. By Order dated 27-6-2001, the Delhi High Court directed Modipon Ltd. (Defendant No. 5 in the suit) 'to consider the participation of purchase of shares of Modi Rubber Ltd. made by defendant Nos. 10 and 12 by 2-7-2001'. It was, however, clarified that the right of purchase of shares of MRL by defendant Nos. 10 and 12 shall be subject to the outcome of the decision of the Bombay High Court where the order of the SEBI denying participation to Modipon Ltd. had been challenged, and also subject to the decision of the Debt recovery Tribunal, Delhi, and that of the SEBI. The proceeds were not to be paid to Modipon Ltd. till the decision of all the pending applications. Pursuant to the order of the Delhi High Court, the board of directors of Modipon Ltd. in its meeting held on 1-7-2001, resolved to participate in the public offer, subject to the conditions that (1) Prior written consent of the banks and financial institutions shall be obtained; and (2) Such offer shall be subject to the outcome of the decision of the Bombay High Court, and subject to the decision of the Debt Recovery Tribunal and of SEBI, and also subject to the rights and claims of the parties in the Delhi High Court proceedings as stated in the order of the Delhi High Court dated 27-6-2001.

Accordingly, Modipon Ltd. preferred an appeal before the Tribunal, being Appeal No. 34 of 2001, and the same was allowed by the Tribunal by its order dated 31-7-2001. The order passed by the Tribunal has been challenged in this appeal by Mr. K.K. Modi.

12. Mr. Janak Dwarkadas, the counsel appearing on behalf of the appellant, has urged before us three main contentions:

Firstly, it was urged that the appeal filed before the Tribunal purportedly on behalf of Modipon Ltd. was filed without the authority of the board of directors of Modipon Ltd., and, therefore, the appeal was, ab initio void, as it was filed without any authority either of the resolution of the Board or of the Chairman, and the person signing it was not authorised to act for the company. Secondly, it was urged that Modipon Ltd., being a promoter of the target company, MRL, could not participate in the open public offer. Relying upon the public announcement dated 30-3-2001, it was submitted that the acquirers held only 12.56 per cent of the share capital of the target company. They were, admittedly, promoters of the target company, and the offer was made in accordance with Regulation 11(1). The said Regulation was applicable to an acquirer who together with persons acting in concert held 15 per cent or more, but less than 75 per cent of the shares or voting rights in the company. The acquirers, together with persons acting in concert with them, including Modipon Ltd., had acquired 23.40 per cent of the equity capital of the target company. It, therefore, followed that the acquirers being part of the promoters' group, together with persons deemed to be acting in concert with the promoters' group, including Modipon Ltd., had acquired 23.40 per cent of the shares of the target company, and they constituted the present management of the target company. If the shares held by Modipon Ltd. were to be excluded, Regulation 11(1) could not have any application to the acquirers. According to him, Modipon Ltd., being a Promoter of MRL, the target company, was a person acting in concert with other promoters, viz., the acquirers, respondent Nos. 4 to 7, who made a public offer to acquire shares of MRL. Control over MRL is exercised jointly by promoters of MRL, including Modipon Ltd., acting in concert with each other. Thus, by virtue of being a promoter, Modipon Ltd. is deemed to be acting in concert with other promoters, inasmuch as the promoters are jointly in control of MRL. Even factually, Modipon Ltd. has always acted in concert with the other promoters of MRL. A distinction is sought to be drawn between promoters, persons in control, and persons acting in concert with them, on the one hand, and other shareholders, on the other. A public offer is made to the public at large, and promoters are not, and can never be treated, as public vis-a-vis the company of which they are promoters. It may be public in context of an offer by non-promoters who want to acquire control from the promoters or otherwise replace the promoters by acquiring control. But, one promoter can never be public vis-a-vis an offer made by another promoter. Moreover, the acquirers had, in making the public offer, acted on the basis that Modipon Ltd. was acting in concert with them. The public offer having been made on that basis, it was not permissible in law for any authority to change or alter the position, and to hold that Modipon Ltd. was not acting in concert, and permit participation by Modipon Ltd. without altering or removing the public offer.

Thirdly, the Tribunal clearly misdirected itself in law in holding that Modipon Ltd. belongs to Group 'A', whereas the acquirers belong to Group 'B'.

13. Mr. Iqbal Chagla, appearing for Modipon Ltd., submitted that the Regulation, regulated acquisition of shares, and not disinvestment of shares. Regulations 10, 11 and 12 did not secure any advantage to an acquirer, and, on the contrary, acted to its detriment, inasmuch as an acquirer could not acquire unlimited number of shares, but had to make an offer before such a decision. He did not challenge the finding of the SEBI and the Tribunal that Modipon Ltd. is a promoter of MRL by reason of the definition of 'Promoter' under Regulation 2(2)(/i) of the Regulation, but the question still arose as to whether a promoter must, in all cases, be deemed to be a person acting in concert. Regulation 11 did not deal with a promoter, but dealt with an acquirer or person acting in concert with him. Similarly, Regulation 8(2) made a distinction between a promoter and a person having control over a company. The declaration was to be made as a promoter. Similarly, Regulation 2(1)(b), which defines an 'acquirer', laid emphasis on the acquisition of shares. The very fact that Modipon Ltd. did not wish to acquire, but wanted to divest, militates against the conception that it was an acquirer. Similarly, under Regulation 2(1)(e)(2), a promoter is not a person deemed lobe acting in concert. The intendment of the Regulation is quite clear, and, therefore, by some circuitous method, a promoter cannot be deemed to be acting in concert with the acquirers in all cases. If a promoter does not wish to acquire shares in the target company, and in fact, wishes to participate in the public offer, and to sell shares held by it in the target company, it cannot be said to be an acquirer, or even a person acting in concert with the acquirer, or deemed to be acting in concert with the acquirer. That is why in the letter of offer the acquirers did not mention Modipon Ltd., as a person acting in concert with them, because Modipon Ltd. had no common objective with the acquirers. Even in the draft letter of offer, Modipon Ltd. was not shown as belonging to the promoters' group, and was only shown as amongst the persons deemed to be acting in concert. It was excluded from participation in the public offer only pursuant to the changes suggested by the SEBI in exercise of powers under Regulation 18(2).

28. Mr. Dwarkadas then contended that the appeal preferred before the Tribunal was not authorised by resolution of the board of directors of Modipon Ltd. or by its Chairman. The Tribunal has relied upon the resolution of the board of directors of Modipon Ltd. dated 24-3-1998. Mr. Dwarkadas contended that the resolution only authorised the persons named therein to act on behalf of Modipon Fibres Co., which was the Fibres Division of Modipon Ltd., and not on behalf of Modipon Ltd. itself. Mr. Chagla, on the other hand, submitted that it was not necessary to go into that question, because, admittedly, Modipon Ltd. moved this High Court by filing a writ petition challenging the communication of SEBI to Modipon Ltd. dated 29-5-2001, informing Modipon Ltd. that it was not eligible to participate in the public offer made by the acquirers. It is not their case that Modipon Ltd. had not authorised the filing of such a petition before the High Court. That writ petition, being Writ Petition (Lodging) No. 1536 of 2001, was disposed of by this Court in view of the statement made by the counsel appearing on behalf of the SEBI that the SEBI would hear the parties, and then pass a fresh order. Thereafter, the Chairman of the SEBI passed the impugned Order dated 16-7-2001 which was also challenged by Modipon Ltd. in the aforesaid writ petition. This Court, however, did not interfere with the decision, in view of the fact that an appeal lay before the Tribunal against the order of the Chairman of the SEBI. This Court, therefore, permitted Modipon Ltd. to prefer an appeal before the appellate authority, and, in fact, directed the appellate authority to decide the appeal on or before 31-7-2001. Mr. Chagla, therefore, submitted that pursuant to an order of this Court in a duly constituted proceeding, the appeal was preferred before the Tribunal. The appellants, therefore, cannot contend that the filing of the appeal was not authorized by the board of directors of the company. We have earlier noticed that the filing of the writ petition challenging the decision of the SEBI to exclude Modipon Ltd. from participation in the public offer has not been challenged on the ground that it was not authorised by Modipon Ltd. The filing of the appeal before the appellate authority was, therefore, pursuant to the direction of this Court in a duly constituted proceeding before this Court. We find considerable force in the submission of Mr. Chagla, and it must be held that the appeal filed before the Tribunal was maintainable, and did not suffer from any legal infirmity.