The RoC, on behalf of the regional director, had filed an affidavit on July 20, 1998, opposing the merger of Hoechst Marion with Roussel India on various grounds of public interest. The affidavit was filed in a petition of the Hoechst Marion's employee union, which has also opposed the merger.

When the matter came up for hearing on September 10, the court was verbally informed that the centre had withdrawn its objections to the merger. The court had directed the government counsel to file an affidavit on Friday.

At Friday's hearing, however, justice FI Rebello expressed his displeasure on thecentre's failure to file the affidavit. "Serious allegations had been made by the central government in its affidavit including violations of Foreign Exchange Regulation Act in remitting around Rs 4 crore to a multinational company outside India and now these have been verbally withdrawn," he said.

According to justice Rebello, the entire conduct of the government in first making these charges only to withdraw them seem to have been done with `oblique motives', which required to be examined by the court.

The Hoechst Employees Union, represented by Anand Grover and Rabindra Hazari, in one of its affidavits, had alleged that Roussel India artificially boosted the sales and profit figures and that the company should post a negative cash flow of around Rs 9.2 crore.

In the August 5 hearing, the union filed an affidavit supporting the one filed by the RoC on July 20. The RoC said that the amalgamation of the companies would not be in public interest.

The RoC and the union have been urging for investigationof alleged excess remittances made by Hoechst Marion to Roussel Laboratories Ltd of the UK by overvaluing the Roussel India's share.

The union has alleged that the company suppressed the facts before the Reserve Bank of India. Roussel India has also been accused of not following a consistent accounting policy.