After submitting a favourable opinion from solicitor-general Soli Sorabjee, the Chhabria camp has lined up another favourable private opinion from the country's additional solicitor-general, Altaf Ahmed, on the non-applicability of the takeover code during the group's "indirect" acquisition of shares in Herbertsons.

The additional solicitor-general has given a clean chit to the Chhabrias stating in no unclear terms that the acquisition of shares in investment firms-IMFA, Mahameru and Shirish-which led to the indirect acquisition of shares in Herbertsons "do not violate any provision of the 1994 regulations." The opinion is categorical that "there never was any obligation" on the querist, Madanlal D Chhabria, to have madean open offer, and hence "no adverse consequences" could flow if the offer is later withdrawn.

The argument derives strength from a Sebi Appellate Tribunal order, dated July, 16 1998, in Fascinating Leasing & Finance (Pvt) Ltd vs. Sebi, which held that if the acquisition is in one stroke and the acquirer has had no shareholding before such acquisition, Regulations 6 and 10 of the Takeover Code, 1994, are not violated.

The private view of the additional solicitor-general, which comes close on the heels of a favourable opinion from Sorabjee, is in total agreement with the solicitor-general's own private views on the matter. "I am in complete agreement with the reasonings and views recorded by the learned Attorney-General in his opinion dated October 9, 1998, and fully subscribe to his conclusions," Ahmad has said.

The acquisition of three unlisted investment companies by the Chhabrias during late 1997 hiked their stake in Herbertsons to around 48 per cent from 27 per cent earlier.

Upon a directive fromSebi that the transaction, in effect, triggered the takeover code, the Chhabrias agreed to make a public offer early last year. The Chhabrias made a "without prejudice offer" in a letter to the Sebi chairman dated January 20, 1998, despite contrary legal opinions that the indirect acquisition of shares in Herbertsons did not violate provisions of the Takeover Code, 1994. "It is self-evident from the communication of the querist that he has already taken an unequivocal position based on the informed legal opinion from the eminent sources consisting of former Chief Justices of India and noted senior advocates of the Supreme Court that the acquisitions in question did not violate the takeover code," the additional solicitor general said.In his private opinion on the issue, former finance minister P Chidambaram had stated: "The querist did not have, and does not have, any obligation to make a public offer. "However, assuming that on the fact of the present case a public offer is warranted, the querist hasalready conveyed his decision to make a public offer. Sebi cannot, and should not, stand in the way of making such a public offer."