The Supreme Court directed Luxottica Group SPA to deposit Rs 63 crore (Rs 630 million) in bank guarantee with the Securities and Exchange Board of India, while admitting its appeal against the order of Sebi in the take-over of the eye care arm of Bausch & Lomb, the owners of the famous Rayban brand of spectacles.

The court stayed the judgment of the Securities Appellate Tribunal subject to the furnishing of the bank guarantee.

Visually impaired

One issue is about the valuation of Indian company and payment of interest to shareholders. Another issue is whether Sebi can interfere in agreements signed abroad about merger of Indian subsidiaries of foreign companies

One of the main issues in this case is the valuation of the shares of the Indian company and payment of interest to the shareholders.

Another issue is whether Sebi can interfere in agreements signed abroad about merger of Indian subsidiaries of foreign companies.

Luxottica, an Italian company, decided to buy the world-wide business of Bausch & Lomb, a US company, in sunglasses and spectacle frames in 1999.

Bausch & Lomb South Asia Inc, a subsidiary of the US company, held 44 per cent equity holding in the Indian subsidiary, which is the target company.

However, the Indian company had both eye care products as well as eye wear business. The 1999 agreement was to take over the eye wear business only, after hiving it off from the whole.

Pursuant to the shareholders' resolution in 2000 and other steps, the board of directors of Bausch & Lomb was reconstituted to include the Italian company's nominees.

Sebi issued show cause notice to Luxottica for alleged violations of its regulations, starting the litigation.

The tribunal held that the regulations and the consequential steps were operative from 1999. It also directed that interest shall be payable at the rate of 15 per cent from 1999.

Luxottica says that in that year, it was only a conditional agreement, signed in New York. The triggering date was in 2000, according to it.

Luxottica earlier informed Bombay Stock Exchange on Monday that it has filed an appeal in the Supreme Court under section 15Z of the SEBI Act against the judgement and the final order dated August 29, 2003 passed by the SAT.

Sebi also filed its counter appeal before the Supreme Court against order dated August 29 of SAT, which primarily relates to shareholders eligibility to receive interest.