Sources say that Chhabria is ready for a settlement provided UB group or Mallya shells out Rs 120 crore in return for the 49 per cent stake acquired by Chhabria and his associates. The cost of acquisition for Chhabria's acquisition was around Rs 32 crore. Besides, Chhabria is also interested in getting back BDA Ltd, which is presently a 100 per cent subsidiary of Herbertsons, into his fold.

Mallya's Team A led by top Herbertsons directors are closeted with their legal advisors, Bacchu Momin & Co to finalise the strategy for the AGM to be held in Mumbai.

Meanwhile, the Securities and Exchange Board of India (Sebi) is keeping a low profile over the entire takeover drama due to the legal complications arising out of theMallya moving the Mumbai High Court against the acquisition of shares by Chhabria.

Even before Sebi could give its verdict, a close associate of Mallya has moved the court saying that the shares acquired by Chhabria are not conforming to the Sebi's takeover code. As a high court is a higher judicial body than the Sebi, the latter has decided to wait for the Court's verdict.

Riding on the takeover reports, the Herbertsons scrip moved up to touch the upper limit at Rs 76.25 on Monday as compared to its previous closing of Rs 70.65 on the Bombay Stock Exchange (BSE) as investors renewed their interest in the company ahead of the meeting.

Chhabria had earlier served two notices to Herbertsons seeking the removal of Chairman and Managing Director, Vijay Mallya and three other Mallya nominees in the AGM. The Mumbai High court has said that the resolution seeking Mallya and the removal of his directors should be voted and the proxies be kept in a sealed envelop with the registrar of the court till the nexthearing scheduled for February 9, 1999.