Kirloskars' to challenge Sebi for seeking disclosure of family settlement

Four Kirloskar companies on Tuesday said they are preparing to legally challenge a letter by markets regulator Sebi asking them to disclose the deed of family settlement that was signed by members of the Kirloskar family on September 11, 2009.

In separate regulatory filings, Kirloskar Ferrous Industries Ltd (KFIL), Kirloskar Industries Ltd (KIL), Kirloskar Pneumatic Company Ltd and Kirloskar Oil Engines Ltd maintained they are not bound by deed of family settlement (DFS) nor does it have any impact or create any restriction or liability on them.

Sebi in a letter dated December 30, 2024 advised the companies to disclose the DFS, entered into amongst the members of the Kirloskar family in their personal capacity, under the Sebi listing obligations and disclosure requirements regulations, they said.

Kirloskar siblings, with Sanjay (Kirloskar Brothers Ltd Chairman and Managing Director) on one side and Atul and Rahul on the other, have been in a feud since 2016 over the DFS for the assets of the more than 130-year-old Kirloskar group.

Rahul Kirloskar is the executive chairman of Kirloskar Pneumatic Co Ltd(KPCL) and Atul Kirloskar is the Executive Chairman of Kirloskar Oil Engines Ltd(KOEL).

The question of whether the DFS is binding on them, is pending before the civil court since 2018, the Kirloskar companies claimed adding "despite this Sebi has opined on matters that are sub-judice. Further, SEBI's decision not only contains factual inaccuracies but is in complete ignorance of...settled principles of contract law, corporate laws and company law".

Further, the companies asserted that they maintained the stand that they are not bound by the DFS nor does the DFS have any impact on them separately or create any restriction or liability on them.

Therefore, the companies said they are "not required to disclose the same" under the Sebi listing obligations and disclosure requirements regulations.

Each company said they are "in the process of availing its legal remedies to challenge the said Sebi letter by filing appropriate legal proceedings".

Sebi in its letter stated that "since the DFS is subsisting in nature, indirectly creates a restriction on the listed entities managed/promoted by the parties to such DFS, warrants disclosure, regardless of whether such listed entity is a party to the agreement or not" under relevant provisions and advised the company "to disclose the DFS in terms of LODR Regulations".

Sanjay Kirloskar had filed a complaint for non-disclosure of the DFS. KOEL on September 11, 2023 responded to the NSE that it was "nothing but one more of his repeated attempts to try and somehow cause KOEL to be bound by the DFS (entered between the family members of the Kirloskar group in their individual capacity) for his own ulterior motives and in furtherance of his personal vendetta with the other family members, which is now public record".