Talking to newsmen after meeting Finance Minister Yashwant Sinha, Mr Mehta said Bajoria-Bombay Dyeing affair has also underlined the need for amending the takeover code to make it foolproof.

He said that there were certain loopholes in the code and the regulator would be seeking further recommendations for changes in the takeover code.Mr Mehta said: "I am not commenting on the Bajoria issue ...we think that there is need for changes in the takeover code and the committee headed by Justice Bhagwati will be looking at the necessary changes." Asked whether the regulator has sought more powers from the government, Mr Mehta said the Dhanuka committee recommendations are already with the government for necessary action. "The government is examining the request," he added. The jute baron Mr Bajoria claimed that he had 14 per cent stake in Nusli Wadia-controlloed Bombay Dyeing.

Mr Bajoria told Sebi that he had informed Bombay Dyeing about the acquisition of 5 per cent of shares in the textile company's equity through the Calcutta-based Mega Resources.

However, Bombay Dyeing has been maintaining that it never received any communication from Mr Bajoria. The takeover code, it may be mentioned, allows the promoters to raise stake in their firms through creeping acquisition of up to five per cent annually. Non-promoters have to notify stock exchanges and the company within four days of picking up 5 per cent stake before the subsequent provisions of the takeover code comes into force. On reaching 15 per cent, non-promoter investors have to make an open public offer for purchase of at least 20 per cent of the equity at a pre-determined price.

The controversy has even divided the chambers of commerce and industry, with Assocham and Confederation of Indian Industry (CII) demanding that a review of the Sebi's takeover code and Ficci maintaining that Mr Bajoria's claim could not be set aside if it was in conformity with the existing regulations.