Kirloskar deed disclosure case referred back to Sebi

Mumbai: The dispute among the Kirloskar siblings over the non-disclosure of the deed of family settlement (DFS) to the stock exchanges has been referred to market regulator Sebi, following a series of hearings in various authorities including in the Supreme Court and the securities appellate tribunal (SAT).

SAT earlier this week has disposed of appeals filed by Kirloskar Oil Engines, Kirloskar Ferrous Industries, Kirloskar Pneumatic, Kirloskar Industries, and GG Dandekar Properties, against Sebi's October communications addressed to them to disclose the DFS within seven days from the receipt of those regulatory directives.

SAT in its order dated October 21, 2024, directed these companies to submit a detailed representation to Sebi within four weeks and Sebi's counsel submitted that the regulator shall hear and dispose of these representations within six weeks therefrom.

Sebi, through its communications dated October 7, 9, and 14, advised five Kirloskar companies controlled by Atul and Rahul Kirloskar and their family to disclose the DFS and these companies subsequently challenged Sebi's order before SAT.

The DFS, dated September 11, 2009, was an agreement amongst certain Kirloskar family members to divide ownership, management, and control of several group companies, including listed entities, and also contained non-compete clauses.

In 2015, the Sebi listing norms were notified and they prescribed disclosure by listed entities of events or agreements, including family settlement agreements. Later in 2023, Sebi amended these listing disclosure mandates that all such agreements made even prior to 2015, must be disclosed by listed companies, even if the company itself was not a direct signatory to the agreement.

The Kirloskar siblings, Sanjay, Atul, and Rahul, have been at odds over several aspects of the 2009 DFS, which governs them and the companies under their control. These disputes are being addressed in courts across Pune, the Mumbai High Court, and the Supreme Court.

The non-disclosure of DFS issue reached the Supreme Court in 2022 when Sanjay Kirloskar-led Kirloskar Brothers filed an appeal seeking a directive to Kirloskar Oil Engines to disclose DFS with Sebi's amended listing regulations.

In April this year, during a hearing, Sebi informed the Supreme Court that Kirloskar Oil Engines and Kirloskar Brothers would be required to disclose their 2009 DFS under the amended LODR Regulations. The Supreme Court gave liberty to Kirloskar Brothers to file a fresh complaint under the amended regulations with Sebi regarding the non-disclosure, after which Kirloskar Brothers withdrew its appeal.

Sanjay Kirloskar declined to comment, while Atul and Rahul Kirloskar said that the matters are sub judice and the SAT order dated October 21, 2024, is in the public domain and is self-explanatory.