Engineering giant Larsen and Toubro and Aditya Birla group firm Grasim Industries [Get Quote] are set to settle their long-standing dispute over the sale of cross-holdings out of court.

Both the companies are believed to be in consultation with Chennai-based chartered accountant S Gurumurthy to act as arbitrator.

Grasim holds 0.63 per cent, or 1.9 million shares, in L&T while L&T owns 11.49 per cent in another subsidiary of the Aditya Birla Group, UltraTech Cement [Get Quote], which was once part of India's largest engineering firm.

Grasim wants to sell the stake at L&T's current market price of Rs 3,061.15 per share as on May 6. At the current price, Grasim could earn around Rs 580 crore through the stake sale. But L&T wants to sell the shares at Rs 120, the price when the arrangement was drawn up between the two companies in 2004, said sources familiar with the developments.

When contacted, Gurumurthy said he had played the mediator's role in the transfer of L&T's cement division to Aditya Birla Group. "The companies have not referred any other issue to me as of now," he added.

Both companies declined to comment on the issue as the case is pending before the Bombay High Court.

Gurumurthy is known to have played a pivotal mediating role to resolve the feud between Bajaj Auto [Get Quote] Chairman Rahul Bajaj and his younger brother Shishir, who controls Bajaj Hindusthan.

In 2004, Gurumurthy also ended another corporate stalemate when he persuaded non-resident Indian investor C Sivasankaran to divest his 33 per cent holding in the Tuticorin-based Tamil Nadu Mercantile Bank for Rs 130 crore.

In 2007, L&T had filed a case in the Bombay High Court but its petition was rejected. L&T then appealed to the higher division bench of the court. Both the companies will withdraw their petitions if the out-of-court settlement plan progresses.

According to sources close to the development, "The legal formalities take time, which is hampering the interests of both the groups. So the companies are evaluating the options to settle the issue outside the court. Now we are working for the right deal."