Mumbai: The custodian of Harshad Mehta shares has decided not to put Mehta's ACC and Bombay Dyeing shares for the auction scheduled for 22 August. Mehta's remaining shares in Reliance Industries, ITC, Apollo Tyres, Punjab Tractors and Tata Tea valued at around Rs 95 crores will, however, be put for sale on the same day.

"Mehta's ACC and Bombay Dyeing shares termed as 'controlling block' will not be put for sale now, due to some court-related issues," sources close to the development say. "His shares, which amount to nearly 12 per cent of the equity capital of ACC, could create an unprecedented situation when it is put for sale. It has the potential to cause a few ripples in the cement sector and cause some anxiety to the Gujarat Ambuja group, the single largest shareholder in the cement major."

The Gujarat Ambuja group owns a shade under 15 per cent — a threshold that triggers the Securities and Exchange Board of India's (Sebi) takeover code for an open offer — of ACC's equity capital.

The group could be caught in a dilemma if it acquires Mehta's holding in ACC, as it will then breach the threshold of 15 per cent and will have to announce an open offer for another 20-per cent stake. On the other hand they if they don't pick up these shares a competitor like Lafarge, which is a keen bidder for these shares, can buy the lot and cause problems for Gujarat Ambuja.

Never before has a situation like this arisen where such a purchase triggers off the takeover code. Sebi's regulations governing takeovers and buyback of shares are silent on this issue.

According to sources, there are 14.60-lakh shares of Reliance, 12.50-lakh shares of Apollo Tyres, 1.18-lakh shares of ITC, 6.04-lakh shares of Punjab Tractors and 2.33-lakh shares of Tata Tea, which will be sold through auction on 22 August. Currently, these shares have a market value of around Rs 95 crore.

The history of the sale of these shares of Mehta through auctions by the custodian shows that the shares of most of the companies were sold at a discount to the market price.