This case pertains to Sterlite's registrar, Karvy, not accepting shares of Templeton lodged by its custodian HongkongBank, on the grounds that these had been lodged after the deadline.

The case before the appellate authority is different from the one where Sebi is taking a view on whether Sterlite was right in withdrawing its offer and therefore decided to reject the applications of some investors.

Sterlite had made an open offer for Indal at Rs 221 per share. Templeton had asked its custodian, HongkongBank, to furnish 9 lakh shares under the offer. This was rejected by Sterlite's registrar, Karvy, on the grounds that the shares were submitted after the deadline. This, according to the bank, is not true andmaintained that the shares had been submitted ahead of the deadline.

Sebi had, in its July 9 order, directed Karvy to accept the shares. "Given the evidence on record by HongkongBank we deemed it fit to give them the benefit of the doubt. The evidence of having submitted the shares on time was not 100 per cent but was reasonable enough to merit acceptance of the shares," Sebi chairman DR Mehta had maintained.

Sterlite recently went in appeal to the appellate authority. The appellate authority first issued a notice to Sebi. Sebi, however, pointed out that being the regulator it had given a decision on the basis of facts present before it and that as the issue of interpreting whether the shares were furnished on time was between HongkongBank and the company, the custodian should be asked to explain its position.

Taking note of Sebi's plea, the appellate authority issued a notice to HongkongBank. The next hearing in the case is scheduled later this month.

The issue had snowballed into a major controversywith the head of Templeton's emerging market funds and investment "guru" Mark Mobius taking up the matter with the Sebi chairman.

He had expressed dismay at the development and this had prompted Sebi to come out with a quick decision.

Sterlite had offered Rs 221 per share as against Alcan's Rs 200. However, it decided to withdraw its offer after Sebi asked it to prescribe with the preferential shares allotment guidelines since a major part of the offer was in the form of optionally convertible preference shares.

Sebi rejected Sterlite's plea to withdraw the offer and froze its escrow account as well. Before Sebi could give its final order, Sterlite moved the Delhi high court twice seeking judicial recourse. The court, however, rejected Sterlite's appeal on the grounds that it was premature. Subsequently, a detailed hearing on the case was held and the Sebi chairman has reserved his order on the same.