Apollo Tyres ordered to return 4.95% ‘Harshad Mehta share’

Almost 20 years ago, Harshad Mehta achieved infamy in India through an engineered rise in the Bombay Stock Exchange that became known as the ‘securities scam’. After the stock broker’s activities came to light in mid-1992, a number of Mehta’s assets were sold off as part of court proceedings. This sale included 5,488,850 shares in Apollo Tyres, equal to 15.1 per cent of the company’s equity, which were purchased by Apollo and its managing family the Kanwars in April 2003. Now the Supreme Court in New Delhi has ordered Apollo Tyres to return a portion of these acquired shares to the Mehta family custodian. A two-judge Supreme Court bench accepted in part the appeal of Ashwin Mehta, brother of Harshad Mehta (who died in 2002) challenging the Mumbai Special Court’s 2001 order that allowed the sale of bulk holding shares back to Apollo Tyres.

Apollo Tyres paid Rs 90 per share when making its 2003 purchase, an amount said to be below both the book price and the going market rate. According to the Supreme Court, the Special Court failed to make a serious effort to realise the highest possible share price. However it believes that rescinding the entire sale of 5,488,850, as sought by Ashwin Mehta, is impracticable and the sale should thus be restricted to 4.95 per cent of Apollo Tyres’ equity. The Supreme Court has remitted the case to the Special Court, who will take the necessary steps to recover the 4.95 per cent shareholding from Apollo or its management and put it to fresh sale.