The Supreme Court on Thursday gave one last opportunity to the Kirloskar brothers — Sanjay, Atul and others — to explore the possibility of resolving their long-standing family feud over division of assets through “preliminary” mediation under former SC judge Indu Malhotra.
Earlier, the warring parties had agreed for mediation by Justice Malhotra.
A bench led by Chief Justice NV Ramana asked Sanjay and Atul and 13 other respondents to cooperate and raise all the objections before the mediator. “We feel that as a preliminary steps, the existing parties shall appear before the mediator, who shall look into the modalities to be worked out for settlement and whether that could be done with the existing array of parties or the need for any other parties to be joined for mediation,” the apex court said.
It added: “In view of that, we direct both the parties to approach the mediator for preliminary discussion on these issues at the earliest and report back to us on December 15.”
The SC had on July 27 ordered status quo in the matter and asked the parties to explore the possibility of mediation.
Both Kirloskar Brothers (KBL), a pump manufacturing company, and its CMD Sanjay Kirloskar had challenged a Bombay High Court June 21 order that sent the family dispute for arbitration.
The Kirloskar family dispute has pitched Sanjay Kirloskar against his brothers, Atul Kirloskar and Rahul Kirloskar, and cousin Vikram Kirloskar. The main dispute is regarding breach of the Deed of Family Settlement signed on September 11, 2009 where management of several Kirloskar companies was divided between the brothers.
The deed separated ownership, management and control of different Kirloskar Group companies and distributed among the three brothers (Atul, Sanjay and Rahul) and their brother-in-law Gautam Kulkarni.
Sanjay Kirloskar got to lead the pump manufacturing company, Kirloskar Brothers while Atul Kirloskar and Rahul Kirloskar led the engine manufacturing company — Kirloskar Oil Engines. These were two flagship companies of the 130-year-old Kirlsokar Group.
On Thursday, senior counsel AM Singhvi, appearing for KBL and Sanjay, respectively, argued that Atul and some other respondents have directly/indirectly incorporated various companies, including Optiqua Pipes and Electricals (OPEL), in February and also acquired a stake in other company like ESVA Pumps India in August. He further argued that OPEL had acquired a 49% stake in ESV as the latter can engage in businesses that are in competition with that of KBL.
The family settlement prohibits any party or any Kirloskar Group company under their control from competing with one another.
“The respondents have been acquiring stakes in companies and establishing business relationships to engage in business activities competitive with the petitioner herein. This goes against the very grain and purpose, and the letter and spirit of the Deed of Family Settlement (DFS),” KBL said in its affidavit.
To avoid any further litigation, KBL, however, urged the SC to direct not only all the signatories to the DFS but all companies (whether present and future), under their management/control to unconditionally submit themselves to mediation/arbitration.
However, senior counsel Shyam Divan and Ritin Rai, appearing for the Atul Group, argued that their companies — Kirloskar Oil Engines, Kirloskar Proprietary and La Gajjar Machineries — are not bound by DFS as they were neither signatories to the settlement nor are parties before the SC, and hence cannot be parties to mediation/arbitration. Even the two new companies OPE and ESVA have not been impleded in the appeals, thus no relief can be claimed against them, Atul, (CMD of Kirloskar Engine Oils) and Rahul (CMD of Kirloskar Pneumatic) stated in his reply.
An earlier round of mediation in 2017 had failed when economist Vijay Kelkar had to relinquish his role as a mediator in May 2018 after recording in his final report that the issue relating to infraction of the ‘non-compete clause’ of the DFS could not be resolved.