The court has, however, simultaneously stayed its verdict till July 15, to enable Chhabria appeal against the order in the Supreme Court. But a lot would depend on Sebi's decision on whether Chhabria's acquisition of these shares were in violation of the takeover code or not. In a related development, Sebi has adjourned the second personal hearing scheduled on Friday for the Chhabria and Vijay Mallya camps in connection with the case.

The Mumbai high court order means that Chhabria's attempt to pack the Herbertsons boardwith his nominees has received a setback. The court has asked Sebi to expeditiously give a verdict on whether the acquisition of Chhabria's 20 per cent shares were in violation of the takeover code.

The court said that the ballot box will be opened in the presence of a court officer and two representatives of either side. It has also said that the company must not take any policy decision like sale of assets for eight weeks.

Sebi, which had earlier given a combined hearing to both the factions some time back, had set a second hearing for Friday. At the first hearing, it was conveyed to Sebi that as the high court was seized of the matter the regulator should wait for the verdict on this case. On Wednesday, the two sides sought a further adjournment considering that the order was yet to be announced.

Now that the court has passed an order, both the camps have sought independent hearings and have opposed being heard together. Sebi chairman DR Mehta said that he would expedite the process since the courthad given its verdict.

The Mallya camp says that Chhabria had purchased 20 per cent shares in Herbertsons in late 1997 in violation of the takeover code. Apart from these 20 per cent shares, Chhabria already owned 27.2 per cent, of which 1.2 per cent accrued to him after the conversion of fully convertible debentures. In contrast, the UB group itself owns 26 per cent and along with its associates controls a total of 35 per cent of the company's equity.

At the AGM, Chhabria had sought to oust members of the board and put in his nominees which would have meant a virtual takeover of the management. However, this was challenged by the current management on the ground that the 20 per cent shareholding which Chhabria was claiming was disputed. The resolution was put to vote but the counting of the votes was suspended till such time as the court took a view on the matter.

The high court order ensures that the votes are not counted till July 15. The Chhabria camp, sources said, is expected to go in appealagainst the verdict. The Sebi verdict on whether Chhabria violated the takeover code, now holds the key.