The negotiated deal for the sale of 15.05 lakh shares, struck at Rs 55 a share, increases Raju's stake from 43.88 per cent to 50.23 per cent in Sri Vishnu Cement. More important, the stake of institutions now goes down from around 26 per cent to just below 20 per cent, below the crucial 25 per cent level with which they could have blocked any resolution at a board meeting or at a general meeting of shareholders.

A mere 24 hours ago, the Sebi had postponed a final hearing on the legality of transfer of Sri Vishnu from Raasi to investment firms owned by Raju, which, analysts say, could have been the key to future ownership of the company. By selling out to Raju, the institution has given a clear signal about its views.

"ICICI has sold on Friday 15,05,200 equity shares, representing 6.35 per cent of the capital of Sri Vishnu, at the rate of Rs 55 ar share through a negotiated sale," said a press release issued by ICICI.

The ICICI sale also automatically revises Raju's open offer of August 5 made in his personal capacity along with sundry other investment firms. The original price offer of Rs 25 a share stands revised to Rs 55 a share, in accordance with the stipulations of the takeover code. The last date for posting the letters of offer is September 15, while the offer is scheduled to open on September 23 to close a month later on October 22. The public holds approximately 30 per cent of the company's stock.

Sri Vishnu Cement has become the subject of a tug-of-war between Raju and the promoters of India Cement, the firm which took over recently the erstwhile Rajus-owned Raasi Cement. Six months before this happened, in December 1997, Raju had transferred ownership of Sri Vishnu to nine investment companies.

By recently signing a non-disposal undertaking jointly, these nine firms came under the definition of "persons acting in concert" as laid down in the takeover code, and therefore made an open offer to the public for shares of Sri Vishnu Cement. Sebi has been probing why the open offer was not made earlier and whether an annual general meeting of shareholders should have been held (in addition to the board meeting where institutional nominees approved of the deal) to ratify the transfer of Sri Vishnu, and whether, therefore, Sri Vishnu should pass into the hands of India Cement along with Raasi Cement.

But before Sebi could take a decision on the issue, ICICI seems to have decided that Raju could be sold 15 lakh-odd shares to add to the 1.04 crore shares he already held in the company.

The legal position on the approval of shareholders u/s 293(1)(a) of the Companies Act is very clear. In a case involving Brooke Bond India and United Breweries, a Mumbai court had ruled that sale of shares in a company, even if amounting to a controlling interest, would not mean that it is sale of undertaking or part thereof and, consequently, no approval of general meeting is required u/s 293(1)(a). The Sebi, if it decides in favour of India Cement will also have to lay down that whether violation of the takeover code renders the transaction void. The basic issue is whether the transfer was at a reasonable price or not.