Mediation In Kirloskar Family Dispute Over Assets Failed, Supreme Court Informed

The mediation by former Apex Court Judge Indu Malhotra to settle the Kriloskar family feud related to assets has failed, Kirloskar Brothers Ltd (KBL) CMD Sanjay Kirloskar told the Supreme Court on Friday and sought urgent hearing of the plea challenging a Bombay High Court order directing arbitration in the case.

A Bench comprising of Chief Justice N V Ramana, Justice A S Bopanna and Justice Hima Kohli, which had suggested the mediation by Justice Malhotra, took note of the submissions of Senior Advocate A M Singhvi, appearing for KBL, that urgent hearing was needed as after the failed mediation the other party has been selling competing products.

In this matter pertaining to the Kirloskar family dispute, they sought time on the ground of mediation and now after the mediation failed, they are taking steps to sell competing products, Singhvi said.

What happened before Justice Indu Malhotra, asked the Bench. We have not got the report, but I am told that the mediation has failed, the senior lawyer said.

Alright. Let us see next week some time, the Bench said.

Earlier, the Bench had asked industrialist Atul Chandrakant Kirloskar and 13 others, made respondents by KBL, to apprise it of their opinion on the issue of mediation to settle the family feud related to assets.

The Court on July 27 last year had ordered status quo in the case between the feuding family members of the Kirloskar group and it was also extended to the proceedings in the Pune civil court on KBL seeking damages for violation of the family deed.

Asking the parties involved in the case to explore the possibility of mediation, the bench had issued notice on the appeal by Sanjay Kirloskar and had asked them to file replies.

The Supreme Court had asked the Kirloskar brothers, Sanjay and Atul, to explore mediation to resolve the family dispute relating to the assets.

The feud over the deed of family settlement relating to the assets of the more than 130-year old Kirloskar group reached the apex court after Sanjay Kirloskar appealed against the Bombay High Court order that had relegated the dispute to arbitration.

In the appeal, it was contended that the order of the high court is factually and legally untenable and misconceived and it contains serious errors of fact and law and incorrect findings have been arrived at on an erroneous basis.

"The judge has grossly erred in referring the Deed of Family Settlement (DFS) suit and the parties thereto, to arbitration even though certain entities/persons who are parties to the suit are not signatories of DFS, hence not signatories to the arbitration agreement," the appeal stated.

The Kirloskar family members had entered into the DFS in 2009.

According to the appeal, under the DFS, disputes relating to the Kirloskar Institute of Advanced Management Studies (KIAMS) and Kirloskar Foundation (KF) are to be resolved unanimously. In case there is no unanimity, the issue is to be referred to two arbitrators, Anil Alwani and C H Naniwadekar. If they differ in opinion then the dispute is to be referred to the third arbitrator, Srikrishna Inamdar.

DFS makes it clear that only disputes relating to KIAMS and KF shall be referred for arbitration and not other disputes, the appeal said.

Another DFS clause states that no one in the family will compete with any other member in business, it added.

According to KBL, this clause has been violated by Rahul and Atul who have taken a stake in a pump manufacturing company, namely La Gajjar Machineries Pvt Ltd.

Being aggrieved, KBL had earlier filed a case in a Pune civil court seeking Rs 750 crore damages for violation of the agreement. During the pendency of the suit in Pune court, Atul, Rahul and other respondents moved the Bombay High Court saying DFS had a clause that in case of dispute the parties can go in for arbitration.

The High Court, hearing their plea, had agreed with them and ordered a resolution through arbitration.

This order has now been challenged by Sanjay Kirloskar in the Supreme Court on the ground that only disputes relating to KIAMS and KF shall be referred for arbitration and no other disputes would be entertained by the arbitrators.

With PTI inputs