TECHNIP SA versus SMS HOLDING (PVT.) LTD. AND ORS.

Citation: [2005] SUPP. 1 S.C.R. 223 · Decided: 11-05-2005 · Supreme Court of India · Bench: RUMA PAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

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 whi

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