The Hindu Business Line : HC restrains GIC nominee from trading ESOPs of L&T

Mumbai May 10 General Insurance Corporation of India (GIC) has secured an injunction from the Bombay High Court on Thursday restraining Mr B.P. Deshmukh, its nominee-director on the Larsen & Toubro board, from dealing in the employee stock options of L&T.

GIC had moved the High Court to restrain Mr Deshmukh, who had exercised his ESOPs in March 2007.

Earlier in the week, Life Insurance Corporation of India also secured an injunction from the Bombay High Court, restraining its representative on the L&T board, Mr Kranti Sinha, from dealing in ESOPs.

Mr Deshmukh and Mr Shah hold 30,000 ESOPs and 20,000 ESOPs, respectively, under L&T's 2003 stock option scheme. At the ruling share price, the ESOPs are worth Rs 5 crore and Rs 3.38 crore.

The issue surfaced as both Mr Deshmukh and Mr Sinha transferred the shares to their personal demat accounts.

"As a nominee-director, Mr Kranti Sinha cannot accept ESOPs as it is a violation of our instructions. The ESOPs should be returned and should stand cancelled," said a senior LIC official.

The shares had been reportedly issued at a discounted rate of Rs 35 per share.

Have to file replies

Both Mr Deshmukh and Mr Sinha will have to file their replies in June, when the matter will come up for hearing in the court.

Meanwhile, LIC has written to over 100 companies asking them not to issue ESOPs to their nominee directors.

The shares of L&T closed at Rs 1,690 on the Bombay Stock Exchange, lower than its previous close at Rs 1,710.

More Stories on : General Insurance | ESOPs | Courts/Legal Issues | Larsen & Toubro Ltd

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