 "NCLT directs Kirloskars to abide by settlement agreement signed in Sept '09")
The National Company Law Tribunal's (NCLT's) Mumbai Bench has directed the Kirloskar brothers and their entities to adhere to the family settlement agreement signed in September 2009. The tribunal stated that if Kirloskar Industries Limited (KIL), chaired by Atul Kirloskar, wishes to sell shares of Kirloskar Brothers Limited (KBL), they must first offer them to KBL Chairman and Managing Director Sanjay Kirloskar.
The Kirloskar family is embroiled in a legal battle over group assets, with Sanjay on one side, and his brothers, Atul and Rahul, on the other. The three are sons of Chandrakant Kirloskar and grandsons of renowned industrialist S L Kirloskar.
“We are of the considered view that in alignment with the spirit of the deed of family settlement which acknowledges the control and management of KBL to be vested in Sanjay Kirloskar, the shares to be sold by Kirloskar Industries shall first be offered to Sanjay and his nominees, and in case they do not offer to buy those shares within 30 days of such offer under a binding arrangement, KIL shall be free to sell those shares to other persons through either off-market or on-market transactions,” the NCLT order dated May 21 said.
Sanjay has the right of first refusal as and when KIL plans to sell the shares in KBL, the court said. BSE-listed KIL owns 23.91 per cent in KBL as on March 2024, and the court said as they do not exercise control over KBL, therefore, no separate control premium was required to be paid.
While the total valuation of KBL is Rs 13,445 crore as on Thursday, the stake held by KIL is worth Rs 3,215 crore. The promoters own 65.9 per cent stake in KBL.
A spokesperson of KIL said the NCLT had held that the affairs of KBL were being mismanaged and were not being conducted in a transparent and independent manner, confirming that a case of oppression and mismanagement under Section 241 and 242 of the Companies Act, had been made out by KIL and others against KBL, its board and others.
"The affairs of Kirloskar Brothers, being a listed public company, are not being conducted in a transparent and independent manner. The affairs of Kirloskar Brothers are definitely influenced and coloured by the aspirations of Sanjay Kirloskar and his family members in running the affairs of Kirloskar Brothers as per their desires and without any interference. This has impacted the decisions of the Board of Directors of Kirloskar Brothers, its compliance officer, and its participation in the legal proceedings,” KIL's statement to the stock exchanges said.
“Kirloskar Brothers has not remained a neutral party in the present matter, contrary to settled law. The compliance officer of Kirloskar Brothers, as well as its board have acted arbitrarily in contravention of the code of conduct of Kirloskar Brothers and by relying on the private deed of family settlement (“DFS”),” the statement said.