The next hearing will provide an opportunity to the complainants, that is India Cements and a few individuals, to furnish their counter argument to BV Raju's rejoinder to the allegations.

According to SEBI officials, at Thursday's hearing, Raju maintained that the nine companies did not come under the category of "persons acting in concert" when the transfer of Vishnu Cements was effected.

Since the complainants were not present at the hearing, it was felt that in order to provide them an opportunity to present a counter argument a joint hearing of all the parties be held.

"The idea is to give both sides an opportunity to present their cases before passing a verdict and hence the short adjournment", said a senior SEBI official.

Raju was of the opinion that since the deal was completed long before India Cements succeeded in wrenching Raasi Cement from Raju's grip, Vishnu Cement should not be transferred to India Cements along with the assets of Raasi.

He said that India Cements managing director N Srinivasan had, in course of the successful takeover of Raasi, gone on record in the media saying that the acquisition price of Rs 300 per share was based on Raasi's assets alone, and did not take into account the assets of Vishnu Cement, about which Srinivasan had then said he had "no regrets".

Infrastructure and power problems had forced early losses on Vishnu Cement, which Raju had started after successfully setting up Raasi Cement. The company went to the Board for Industrial & Financial Reconstruction, and became a millstone round Raasi Cement's neck. With the interests of Raasi Cement's shareholders in mind, Raju decided to transfer the sick company's shares from Raasi Cement to nine "independent" investment companies, armed with approval for the enabling resolution of three institutional nominees on the Raasi board. Raju says he was advised by experts that the acquisition by the nine companies did not trigger the takeover code, and no open offer was therefore made at the time to Vishnu Cement's remaining shareholders. The deal was completed by December 1997.

This was followed by a takeover of Raasi Cement by India Cements, where Raju was outgunned by India Cements promoters' access to company funds, something not allowed to domestic promoters defending their stakes.

Soon after the takeover, in July 1998, the IDBI sought a non-disposal undertaking from the nine companies, and legal experts pointed out to Raju that the joint signature of such an undertaking would pin the definition of "persons acting in concert" on them and trigger the takeover code. An open offer was accordingly made for an additional 20 per cent of Vishnu Cement shares by the nine firms.