Sebi's application sought an interim stay restraining DIL from proceeding with its rights issue which closed on April 6, 2007, and which had led to a litigation between the two in the past.

The interim stay was granted and the matter was unlikely to come up for hearing before a month or so.

Because of the Sebi move, the listing of DIL shares has been stalled on the stock exchanges in Mumbai, Kolkata, Delhi, Ahmedabad and Chennai, all of whom are among the respondents in the Sebi appeal.

When contacted, DIL Promoter P K Ruia said, "The matter is sub judice and I do not wish to comment on it, but the DIL management team is going through the appeal and will reply to it."

According to Ruia, he felt minority shareholders were likely to be impacted the most by Sebi move as they would not be able to buy or sell the DIL shares on bourses, including those obtained in the rights issue.

The Sebi appeal, a copy of which is with Business Standard, asked AAIFR to set aside the order of BIFR issued on March 16, 2007, permitting DIL to proceed with its rights issue, "to the extent to which it exempts the company/ respondent no.2 (DIL) from complying with the requirements under the various Acts/Regulations formulated by the Sebi/appellant and the stock exchanges and to the extent it affects the regulatory jurisdiction of other statutory authorities under the Sebi Act, SCRA and the Depositories Act, 1996."

The dispute between BIFR, DIL and Sebi had erupted after the March 2007 order, for Sebi had repeatedly challenged the right of BIFR to permit a sick company like DIL to go in for a rights issue as it felt that the right to decide the matter rested with the market regulator, a legal professional involved in the litigation said here.

The said litigation was likely to be a trendsetter as it could decide the fundamental issue of the rights of BIFR and Sebi, two bodies whose jurisdiction often overlapped on their power to authorise sick companies to proceed with their rights issue or other capital raising or restructuring plans.

Following the BIFR order, Sebi had initiated legal action against DIL to stop its rights issue, but DIL had successfully challenged the Sebi action in the High Courts like the one at Kolkata and obtained permission to proceed with the rights issue.

The matter was referred to the Supreme Court as well which directed the High Court to settle the issue. Armed with its legal success, DIL had proceeded with the rights issue and completed the formalities recently, after which Sebi moved AAIFR to stay the completed exercise and the listing process.

DIL had been delisted from bourses as it had become sick and the company, then under the M R Chhabria group, had not finalised accounts or complied with stock exchange formalities for a decade or so till Ruia acquired the company from the Chhabria family.