Kirloskar Family dispute escalates at SAT over disclosure of family settlement agreement

In June 2018, KBL filed a complaint with Sebi, accusing KOEL of failing to disclose the 2009 Deed of Family Settlement.
In June 2018, KBL filed a complaint with Sebi, accusing KOEL of failing to disclose the 2009 Deed of Family Settlement.

Summary

Kirloskar Brothers Ltd pursues SAT intervention in the ongoing dispute with Kirloskar Oil Engines Ltd over a 2009 Family Settlement disclosure. Despite Sebi's directive for transparency, KOEL claims no obligation to disclose, leading to adjourned hearings on January 17.

MUMBAI : The ongoing dispute within the Kirloskar family has intensified, with Kirloskar Brothers Ltd (KBL) seeking intervention in the Securities Appellate Tribunal (SAT) in an appeal filed by Kirloskar Oil Engines Ltd (KOEL). At the heart of the matter is a directive from the Securities and Exchange Board of India (Sebi) requiring the disclosure of a 2009 Deed of Family Settlement (DFS), which KBL contends should be disclosed by KOEL.

The dispute centres on the disclosure and implementation of the DFS, signed in 2009 between prominent members of the Kirloskar family and affiliated business entities. The agreement outlined the distribution of ownership, management, and control of various listed and unlisted Kirloskar entities among different branches of the family. KOEL and KBL, both publicly listed companies, are directly involved in the dispute.

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In June 2018, KBL filed a complaint with Sebi, accusing KOEL of failing to disclose the DFS. When Sebi rejected the complaint, KBL appealed to the SAT in 2021, but the tribunal upheld Sebi’s decision in 2022. The matter was subsequently brought before the Supreme Court, which allowed KBL to refile its complaint with Sebi, directing the regulator to review the issue.

In its affidavit before the Supreme Court, Sebi clarified that under amended regulations of the Listing Obligations and Disclosure Requirements (LODR), all listed entities must disclose agreements that impact their management and control. “In the present case, both the companies are listed entities and dealing with public investors of all sizes, hence it is paramount to make disclosures of the DFS", the regulator’s affidavit underscored.

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In December 2024, Sebi advised KOEL to disclose the DFS, stating that the DFS was subsisting in nature, indirectly creating a restriction on the listed entities.

In a disclosure with the exchanges, KOEL insisted that the DFS did not impose any restrictions or liabilities on it and therefore was not obligated to disclose it under Sebi’s regulations. “KOEL maintains the stand it is not bound by the DFS nor does the DFS have any impact on it or create any restriction or liability on it. Therefore, the Company is not required to disclose the same under Sebi regulations" its disclosure stated.

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KOEL filed an appeal against Sebi’s advisory in the SAT, which was heard on January 16. However, due to the bench’s engagement with another ongoing case, the matter was adjourned until January 17, when the appeal will be heard alongside KBL’s intervention application.

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