SEBI asks Kirloskar Oil Engine to disclose deed of family settlement

In a new twist to the Kirloskar Family dispute case, the Securities and Exchange Board of India (SEBI) has vide letter dated December 30, 2024 has asked Kirloskar Oil Engines Ltd. to disclose the Deed of Family Settlement (DFS) dated September 11, 2009, entered into amongst the members of the Kirloskar family in their personal capacity under the SEBI LODR Regulations.

This was informed by Kirloskar Oil Engine in a filing with the exchanges on Tuesday.

“The question of whether the DFS is binding on the Company is pending before the Civil Court since 2018, and despite this SEBI has opined on matters that are sub-judice,” the company said in the filing challenge the authority of the market regulator to issue such a directive.

“Further, SEBI’s decision not only contains factual inaccuracies but is in complete ignorance of inter alia settled principles of contract law, corporate laws and company law,” it further said.

“The company maintains that the company is not bound by the said DFS nor does the DFS have any impact on the company or create any restriction or liability on the Company,” it said in a defiant note.

The company said it was seeking legal counsel to challenge SEBI’s decision by filing appropriate legal proceedings.

“We firmly believe in the principles of justice and fairness, and we have full faith that the judiciary will do justice in the matter,” the company said.

The Kirloskar brothers Sanjay Kirloskar, the chairman & managing director of pump manufacturer Kirloskar Brothers Ltd. (KBL) on one hand and his brothers Atul Kirloskar and Rahul Kirloskar who are leading a group of companies including Kirloskar Oil Engine on the other have been feuding for years and fighting court cases over the validity of a DFS.

The family dispute dates back to 2016 over a non-compete clause allegedly violated by Kirloskar Oil Engines Limited (KOEL) when they entered the pump’s business which was the forte of KBL.

On September 11, 2009, a deed of family settlement was entered into between Sanjay Kirloskar, the now late Vikram Kirloskar Atul Kirloskar, Rahul Kirloskar and late Gautam Kulkarni, former executive vice-chairman of Kirloskar Oil.

The deed gave the ownership, management and control of each branch of the Kirloskar family business to the parties specified in the settlement, as per court filings.

The dispute between the siblings ignited after Rahul and Atul-led Kirloskar Oil acquired La Gajjar Machineries in June 2017, which competes with pumps made by Kirloskar Brothers.​

Sanjay Kirloskar said in a petition in 2017 that the companies run by his siblings cannot compete with KBL, in line with a family settlement signed in 2009.

Sanjay Kirloskar also told the court that other family members ventured into a competing business and hence acted in breach of the non-compete agreement signed among the family members.