HB Leasing and HB Stockholding had filed an appeal before the high court against the Jhansi civil court order. The company has contended that the case filed in the Jhansi court was a collusive suit by proxy litigants at the behest of promoters/directors of Indo Gulf Industries to thwart the open offer made by the two HB group companies.

This is the second legal battle between the HB group and the Indo Gulf promoters. HB had a few months ago challenged in the Delhi high court the preferential allotment of 32 lakh shares by Indo Gulf to its promoters at what it claimed was an extremely low price of around Rs 10 per share. The Delhi court has restrained the company and its directors from taking anyfurther steps for allotment of the shares and also directed the Delhi Stock Exchange not to list these shares.

HB had claimed that the allotment was illegal since no general meeting was held. Though the company has claimed that allotment was made at an extra ordinary general meeting on November 24 last year, HB has argued that the company's claims were fraudulent since shareholders were not given any notice for the meeting.

The preferential allotment was also challenged on the ground that it was in violation of various provisions of Companies Act and Sebi Takeover Code. The Delhi High Court in an order earlier this month said that the 32 lakh shares allotted to promoters on preferential basis shold not be included in the issued/subscribed/paid-up share capital of the company.

Indo Gulf Industries was also issued a show cause notice by the Delhi Stock Exchange which charged the company with violation of listing agreement. The bourse subsequently suspended trading of the company's scrip for a fewdays.

Interestingly, Indo Gulf has eminent personalities on the board of directors including former finance secretary Gopi Arora, MP Wadhawan, VP Mittal, GN Mehra, GL Tandon and RS Sharma (nominee of IFCI). The role of these directors could be crucial in the battle between HB group and promoter SK Garg and his brothers.