NEW DELHI, AUGUST 8: Reversing its position on the sale of remaining shares in Balco, the government plans to hold talks with Sterlite Industries Ltd to wean it away from going into arbitration.

On Monday, the government sought time from the Delhi High Court for ‘conciliation and mediation’ with Sterlite before arbitration proceedings, as petitioned by the latter, could be initiated. It has been given a month’s time to conduct the exercise.

Sterlite filed a petition last week seeking court intervention for arbitration in the sale of government’s residual 49 per cent shares in Balco under the call option exercised by the strategic buyer.

While accusing the government of a breach of contract, Sterlite asked the court to restrain the former from selling any equity to any other buyer or the public. In June, following Attorney General Milon Banerjee’s opinion, the government declined to hold a dialogue with Sterlite saying that the shareholders agreement had become ‘null and void’.

The AG had suggested: ‘‘...it would not be in the public interest to sell the shares held by the government at a price valued by SBI Caps. Disinvestment at a lesser price would mean loss to the exchequer.’’ He also said that the shareholders agreement violated the Companies Act.

Balco disinvestment was the first major share sale by NDA government with 51 per cent sold to Sterlite for Rs 551.50 crore in March 2001. As per the agreement, the government was legally bound to sell the remainder by March 2004.

Now, there is serious difference within the government on complete sale of Balco to the Anil Aggarwal-controlled Sterlite group. Even though Sterlite submitted a cheque for Rs 1,098 crore, it has neither been accepted nor encashed. SBI Capital had valued the 49 per cent stake at Rs 842.52 crore.