# TECHNIP SA v. SMS HOLDING (PVT.) LTD. AND ORS - **Citation:** [2005] Supp. 1 S.C.R. 223 - **Court:** Supreme Court of India - **Decided:** 2005-05-11 - **Case number:** Civil Appeal Nos. 9258-9265 of 2003 - **Bench:** Ruma Pal, Arijit Pasayat, C.K. Thakker - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/technip-sa-v-sms-holding-pvt-ltd-and-ors-20723 - **Pages:** 36 ## Headnote Securities and Exchange Board of India Act, 1992-Securities And Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, I 997-Regulations I 0, I I and I 2: Acquisition of Indian Company, subsidiary of French Company by another French Company-Indian law/French law-Applicability of-Held: Relationship of two French companies whether one of control or not is really . A B c a question of their status-The applicable law would, therefore be law of their dolnicile, namely, French law-However question as to their obligations under D Indian law would have to be governed exclusively by Indian law. Date of indirect acquisition-Determination of-S a subsidiary of C, a French company-T, another French company acquired C~T purchased 29.68% shares of C in April 2000-Shareholding of C in S did not constitute substantial part of assets of C-No evidence to show that T acquired C in E April, 2000 to gain control of S-/t was only a strategic alliance-Substantial acquisition took place in July 2001-Therefore date of acquisition is July 2001. Words and phrases-'acquirer' and 'acting in concert '-Meaning of- . In the context of Regulations 2(b) and 2(e) of Securities And Exchange Board F of India (Substantial Acquisition of Shares and Takeover)Regulations, 1997. Private International law: Foreign law-When not applicable-Held: Inapplicable when it is contrQly to domestic public policy and morality. · Technip and Coflexip are French Companies. Seamec is an Indian Company and subsidiary of Coflexip. Technip acquired the control of Seamec through Coflexip. IFP and its subsidiary ISIS are also French Government Co1ttpanies. IFP was shareholder in Technip and Coflexip. Dispute arose as to the date of acquisition. On complaint of Seamec G 223 H 224 SUPREME COURT REPORTS (2005] SUPP. I S.C.R. - A shareholders before SEBI, it was held that French Law was applicable to the takeover for determining the date of acquisition. It found that Technip had Qbtained control of Coflexip in July 2001 without Public offer. SEBI directed Technip to make public announcement as required under the Securities And Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 within 45 days and pay 15% interest to B shareholders for delayed announcement. Before Securities Appellate Tribunal (SAT), the grievance of Seamec shareholders was that date of control of Coflexip by Technip was April 2000 and not July 2001. Pending appeal, Technip made public announcement to acquire shares of Seamec by taking July 2001 as the relevant date. SAT however held that the C relevant date was April 2000 as the applicable Jaw to the question was Indian Law and accordingly directed Technip to pay Seamec shareholders the difference between the price of shares between July 2001 and April 2000 together with 15% interest on such difference. One of the grounds on which SAT came to this conclusion that was based on the fact that both the companies had been promoted by IFP and that IFP through ISIS acting D in concert with Technip had brought about the takeover of Coflexip by Technip. Hence the present appeal. A separate appeal is filed by IFP challenging the allegations made against it in SAT's order. E Allowing the appeals, the Court HELD: 1.1. Admittedly both Coflexip and Technip were incorporated according to and under the laws of France. They are therefore 'domiciled' in France. Normally, any issue relating to their internal affairs would be resolved by applying the Jaw of their domicile, in this case French Law. But by that token it is equally true that Seamec p which was incorporated in India would be governed by Indian law. (236-E~F] G Hazard Brothers and Co. v. Midland Bank Ltd., (1933) AC 289; Metliss v. National Bank of Greece and Athens, SA: (1961) AC 255 and Kuwait Airways Corp. v. Iraqi Airways Co. (2002) UKHL 19, referred to. 1.2. Questions as to the status of a corporation are to be decided according to the laws of its domicile or ## Text _Characters 0–39,975 of 87,253. This is a partial read: ask again with offset=39975 for what follows._ TECHNIP SA v. SMS HOLDING (PVT.) LTD. AND ORS. MAY 11, 2005 [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.] Securities and Exchange Board of India Act, 1992-Securities And Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, I 997-Regulations I 0, I I and I 2: Acquisition of Indian Company, subsidiary of French Company by another French Company-Indian law/French law-Applicability of-Held: Relationship of two French companies whether one of control or not is really . A B c a question of their status-The applicable law would, therefore be law of their dolnicile, namely, French law-However question as to their obligations under D Indian law would have to be governed exclusively by Indian law. Date of indirect acquisition-Determination of-S a subsidiary of C, a French company-T, another French company acquired C~T purchased 29.68% shares of C in April 2000-Shareholding of C in S did not constitute substantial part of assets of C-No evidence to show that T acquired C in E April, 2000 to gain control of S-/t was only a strategic alliance-Substantial acquisition took place in July 2001-Therefore date of acquisition is July 2001. Words and phrases-'acquirer' and 'acting in concert '-Meaning of- . In the context of Regulations 2(b) and 2(e) of Securities And Exchange Board F of India (Substantial Acquisition of Shares and Takeover)Regulations, 1997. Private International law: Foreign law-When not applicable-Held: Inapplicable when it is contrQly to domestic public policy and morality. · Technip and Coflexip are French Companies. Seamec is an Indian Company and subsidiary of Coflexip. Technip acquired the control of Seamec through Coflexip. IFP and its subsidiary ISIS are also French Government Co1ttpanies. IFP was shareholder in Technip and Coflexip. Dispute arose as to the date of acquisition. On complaint of Seamec G 223 H 224 SUPREME COURT REPORTS (2005] SUPP. I S.C.R. - A shareholders before SEBI, it was held that French Law was applicable to the takeover for determining the date of acquisition. It found that Technip had Qbtained control of Coflexip in July 2001 without Public offer. SEBI directed Technip to make public announcement as required under the Securities And Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 within 45 days and pay 15% interest to B shareholders for delayed announcement. Before Securities Appellate Tribunal (SAT), the grievance of Seamec shareholders was that date of control of Coflexip by Technip was April 2000 and not July 2001. Pending appeal, Technip made public announcement to acquire shares of Seamec by taking July 2001 as the relevant date. SAT however held that the C relevant date was April 2000 as the applicable Jaw to the question was Indian Law and accordingly directed Technip to pay Seamec shareholders the difference between the price of shares between July 2001 and April 2000 together with 15% interest on such difference. One of the grounds on which SAT came to this conclusion that was based on the fact that both the companies had been promoted by IFP and that IFP through ISIS acting D in concert with Technip had brought about the takeover of Coflexip by Technip. Hence the present appeal. A separate appeal is filed by IFP challenging the allegations made against it in SAT's order. E Allowing the appeals, the Court HELD: 1.1. Admittedly both Coflexip and Technip were incorporated according to and under the laws of France. They are therefore 'domiciled' in France. Normally, any issue relating to their internal affairs would be resolved by applying the Jaw of their domicile, in this case French Law. But by that token it is equally true that Seamec p which was incorporated in India would be governed by Indian law. (236-E~F] G Hazard Brothers and Co. v. Midland Bank Ltd., (1933) AC 289; Metliss v. National Bank of Greece and Athens, SA: (1961) AC 255 and Kuwait Airways Corp. v. Iraqi Airways Co. (2002) UKHL 19, referred to. 1.2. Questions as to the status of a corporation are to be decided according to the laws of its domicile 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 H corporation, it can be so only by virtue of the law by which it was TECHNIP SA v. SMS HOLDING (PVT.) LTD. 225 incorporated and it is to this law alone that all questions concerning the A creation and dissolution of the corporate status are referred unless it is contrary to public policy. (238-A-B] ' Smt. Surinder Kaur Sandhu v. Harbax Singh Sandhu, AIR (1984) SC / 1224, relied on B In re Langley's Settlement Trusts, (1962) Ch. 541; Russ v. Russ, (19621 3 All E.R.; Oppenheimer v. Cattermole, (1975) 1 All ER 538; 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, c 288 US 123-1518.C.(U.S.) Carl Zeiss Stiftung v. Rayner and Keller Ltd., (1966] 2 ALL ER 536; Gaudiya Mission and Ors. v. Brahmachari and Ors., (1998) Ch. 341; Kuwait Airways Corp. v. Iraqi Airways Co., (No. 3) (2002) UKHL 19 and Lazard Brothers and Co. v. Midland Bank Ltd, (1933) AC 289, referred to. Cheshire and North's Private International Law (12th Edn.) p.174, referred to. D 1.3. The general rule regarding determination of status by the lex incorporationis will not apply when the issue relates to the discharge of t 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 E / 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 domicile, 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 F by Indian law. SA T'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. (238-E, 239-F-G] National Bank of Greece and Athens S.A. and Metliss: (1958) 58 A.C. 509 and Adams v. National Bank of Greece S.A. (1961) A.C. 255, 282, G referred to. 2.1. 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 Indi~ undisputedly subscribes. [241-E-F) H 226 SUPREME COURT REPORTS [2005] SUPP. l S.C.R. A 2.2. The power to disregard a provision in the foreign law must be exercised exceptionally and with the-greatest circumspection "when to do J otherwise would affront basic principles of justice and fairness which the courts seek to apply in the administration of justice in this country." Domestic public policy which can justify a disregard of the applicable ... B 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. (239-H; 240-A; 240-E] Renusagar Power Co. Ltd. v. G.eneral Electric Co., [1994) Supp. 1 SCC • 644, referred to. c Fannie F. Loucks et al., as Administrators of the Estate of Everett A. Loucks, De~eased v. Standard Oil Company of New York, 224 N.Y.99, referred to. 2.3. The difference between the French law and their regulations ; relates to the prescribed limits of share holding for control by one company J D over another. This cannot '.:onceivably make the French law violative of any public policy underlying the Acts and Regulations so as to disregard the French Law. Thus it is the French law which must be applicable to .. decide whether Technip took over the control of Coflexip in April 2000 'I" or July 2001,. [247-D-·E] ) ..... ' E 3. 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. 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 F text of the l'!elevant French law. De Beeche and Ors. v. The South American Stores (Gath and Chaves Limited and the Chilian Stores Gath and Chaves Limited), (1935) A.C. 148, referred to. G 4. The Stock Exchange authorities in France are the 'GMF' and the 'COB'. They are regulatory bodies with powers of inspection, supervision and disciplinary action. The supervisory role of CMF is itself subject to .the French Banking Commissio!l and-the COB; Article 1 and Article 2 of I 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 H 33 of Chapter-I Title-II provides that the CMF shall set forth th~ Rules ,. l TECHNIP SA v. SMS HOLDING (PVT.) LTD. 227 governing public offers including the conditions under which a natural A or legal person, acting alone or in concert within the meaning of Article 356-1-3 of Law 66-37 dated July 24, 1966 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 B 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 are, therefore, rigorous. The Indian law is no less rigorous and differs only marginally with the French law on the subject. [245-E-F; 246-AJ C 5.1. 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. In order to trigger Regulations 10 to 12, it D would have to be established that the purchase of the 29.68% shares by Technip in Cotlexip was with the object of taking control of Seamec. The allegation in the show cause notice was that Technip, the acquirer and ISIS as a shareholder of Cotlexip acted in concert to acquire control over Cotlexip and therefore Seamec, treating Seamec as the target company. E The emphasis is on the target company whether the case is of direct or indirect acquisition under the Regulations. [246-B; 248-C-D) 5.2. Regulation 2(b) defines 'acquirer' as meaning any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company or who acquires or agrees to acquire control over F the target company either by himself or with any person acting in concert with the acquirer. Regulation 2(e) defines the phrase 'person acting in concert' and sub section (i) 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 G co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control ovedhe target company". The word 'target company' in Regulation 2(o) means a listed company whose shares or voting rights or control is directly or indirectly acquired or is being acquired. If the Indian Law were to be invoked in April 2000 it would H 228 SUPREME COURT REPORTS [2005] SUPP. l S.C.R. A 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. (248-E; 249-A-B) 5.3. According to the Bhagwati Committee Report to be acting in B 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 C 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 D 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 !irst company is the med.ium or vessel or vehicle for attaining control o~ 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 E shareholders of Seamec would arise only if either one of the two conditions prescribed is fulfiHed. 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 F a substantial part of Coflexip's assets. (249-C-D, E; 250-B-C] S.4. Threside.nt 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 t~ 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 G 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 sha1·es 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 H of Technip. [253-H; 254-A-B) j' TECHNII" SA v. SMS HOLDING (PVT.) LTD. 231 7.4. Technip has argued that the effect of fhe purchase of the Stena's A 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 B come into the picture. (254-C-D) 7.5. 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 factthat in two Annual General Meetings of C 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 D 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. [254-H; 255-A-B) Hindustan Motors Ltd. v. Monopolies and Restrictive Trade Practices E Commission, AIR (1973) 450, referred to. 8.1. Technip's explanation for ISIS not exercising its pre-emptive 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 F 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 pre-emption could be a Government decision should IFP have caused ISIS to proceed with such a huge investment, it could have been G in breach of the relevant EU regulations as intervention of the State in Private Industry. [255-C-D) 8.2. There is no evidence that Technip acquired Coflexip if it at all did so in April 2000, so as to gain control of Seamec. SEBI said that on H 232 SUPREME COURT REPORTS [2005] SUPP. I S.C.R. A 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, it directed the publication of an offer to Seamec's B taking that as the effective date. Thus, 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 ofCoflexip 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. (255-E-F; 258-E) c CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 9258-9265 of 2003. From the Judgment and Order dated 27.10.2003 of the Securities Appellate Tribunal, Bombay in A.Nos. 79, 80, 85, 91, I 04, I 05, 119/2002 D and I of 2003. Soli J. Sorabjee and A.K. Ganguli, Tasneem Ahmadi, Rajesh Rai, Pritish Kapur, Gaurav Joshi, Bharat Sangal, Ms. Sangeeta Manda), Ms. Sushmita Kapur with them for the Appellants. E Sunil Dogra, Ms. Ritu Bhalla, Zubin Pratap, Joy Basu, Rahul Tyagi, F Madhurendr.a Kr., B.K. Satija, R. Banerjee, Khandwal Securities, (R.4), Ambhoj Kumar Sinha, Gaurang Kanth, Anand Shekhar, Mrs. Gauri Rasgotra, Pradip Kumar Khaitan, O.P. Gaggar, Sudhir Kumar Gupta, Bhargava V. Desai, Sanjeev Kr. Singh, Pradeep Kr. Malik for the Respondents. The Judgment of the Court was delivered by 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) G 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 -m.ajority H TECHNIP SA v. SMS HOLDING (PVT.) LTD. [RUMA PAL, J.] 233 shareholding in SEAMEC. A The question which arises for consideration in these appeals is whether Technip acquired control of SEAMEC through Cotlexip in April, 2000, or in July, 200 I? There is no dispute that if Technip controls Cotlexip 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 B 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 C was Rs.238 per share which was much higher than the price ofRs.43.I2 per share in July, 2001. Technip had not made any public announcement at all, either in April 2000 or in July, 200 I. On the complaint of ·certain shareholders of SEAMEC before the Securities and Exchange Board of India (SEBI), proceedings were initiated D 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 Cotlexip and consequently SEAMEC by Technip for the purpose of determining when such takeover was effected. It found that the Technip had obtained control of Cotlexip in July 2001 and had violated Regulations 10 E 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 announcement as required under the Regulations within 45 days of its order taking 3rd July, · 200 l 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 F minority shareholders of SEAMEC, for the delayed public announcement. The minority shareholders ofSEAMEC 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 Cotlexip by Technip was 12.4.2000 ·and not 3rd July, 2001 as held by SEBI. While the appeal was G 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 ofSEAMEC 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. H 234 SUPREME COURT REPORTS [2005] SUPP. I S.C.R. A 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 B 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 thafTechnip had taken over Coflexip in April, 2000 was based on C the fact that both the companies had been promoted by lFP 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 ofCoflexip by Technip also took place in France, D the applicable law is French. In terms of French Law, according to Technip, there was rro 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 E 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. F 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 lFP from the decision of the G Tribunal being CA No. I 0092/98. 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 H activities nor does it manage or control any listed company. It promotes TECHNIP SA v. SMS HOLDING (PVT.) LTD. [RUMA PAL, J.] 235 companies to apply the results of its own research. IFP says that an unnecessary A 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 B management and control of SEAMEC the provisions of the Regulations would apply. In terms of Regulations IO, 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 C 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 bad been rejected. This issue according to the respondent could D 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 E 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. F (c) Those shareholders, who were shareholders on the date of the public offer holding shares purchased in April 2000 and more G 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 H 236 SUPREME COURT REPORTS [2005] SUPP. I S.C.R. A 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 l 5Z of the Act that it was perverse. B We will start with this final submission. Section I 5Z 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 C or Indian Law. That is a ques.tjon 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 Law (12th Edn.) D "To describe it (foreign law) as one of fact is no_ doubt apposite, in the sense that the appl!cable 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 E 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 domicile, 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 F 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 G 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 H SEAMEC need be tested in the light of 2(c) definition". In other words ·' / TECHNIP SA v. SMS HOLDING (PVT.) LTD. [RUMA PAL, J.] 237 Indian law would apply to determine whether the control of Coflexip was A 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". SA T'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 Dail)' B Industries Ltd. v. National Bank of Pakistan', the role of the appellate Court is such cases is: " .. to examine the evidence of foreign law which was before the justices and to decide for ourselves whether that evidence justifies the C conclusion to which they came2." 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 D law has not been questioned at any stage. What is referred to as "private international law" by some authorities3 is referred to as conflict of laws· by others4• 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 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 'Prakasho v. Singh, (1968) Probate Division LR 250; 2Da/mia Dairy Industries Ltd. v. National Bank of Pakistan, [1978] 2 Lloyd's Rep. 223 at 286; and see Webb (1967) 16 ICLQ 1152, 1155-1156. · 3See Cheshire & North' Private International Law. 'Dicey & Morris: The Conflict of Laws E F G H 238 SUPREME COURT REPORTS [2005) SUPP. I S.C.R. A 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 B 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 C 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 and Ors. v. Brahmacflari and Ors., 1998 Ch. 341; Kuwait Airways D Corp. v. Iraqi Airways Co., (No. 3) 2002 UKHL 19; Lazard Brothers and 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 E 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 F and Athens SA. 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. G 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 t.hat according to Greek law the new company succeeded to the assets and liabilities H of the guarantor company. The question then was whether the English Courts TECHNIP SA v. SMS HOLDING (PVT.) LTD.