The decades-old Kirloskar family dispute is set to take center stage at the Securities Appellate Tribunal (SAT) on 16th Jan, as Kirloskar Oil Engines Limited (KOEL) challenges a SEBI directive requiring the disclosure of a 2009 Deed of Family Settlement (DFS). The dispute, rooted in allegations of selective compliance and corporate governance lapses, has intensified in recent months with regulatory interventions and legal battles.

The DFS, signed on September 11, 2009, was intended to establish clear boundaries of ownership, management, and control among the Kirloskar family’s business arms. It allocated specific businesses to different family members, including Atul, Rahul, and the late Gautam Kulkarni of KOEL, as well as Sanjay Kirloskar of Kirloskar Brothers Limited (KBL). Following the agreement, KOEL sold Toyota JV shares worth Rs 250 crore to Vikram Kirloskar and his nominees, aligning with the settlement’s terms.

However, KBL alleges that KOEL violated the DFS by acquiring La Gajjar Machineries in 2017, a move that directly competes with KBL’s pump business. This acquisition prompted KBL to escalate the matter to the Supreme Court, where the case is still being heard.

In October 2024, SEBI directed KOEL to disclose the DFS, citing its material implications for shareholders and compliance requirements under the Listing Obligations and Disclosure Requirements (LODR) regulations. SEBI’s stance was bolstered by its affidavit in a related Supreme Court case, where it emphasized that non-disclosure of such agreements creates “information asymmetry” and undermines regulatory certainty.

KOEL, however, has pushed back. In its December 31, 2024, filing, the company called SEBI’s directive an “ignorant interpretation” of contract and corporate laws. On January 4, 2025, KOEL filed an appeal with SAT, arguing that the DFS is a private agreement with no bearing on its listed entity obligations.

The upcoming SAT hearing could have far-reaching implications, not only for the Kirloskar dispute but also for how SEBI enforces disclosure norms among promoter-driven businesses. A decision in favor of SEBI could reinforce the regulator’s stance on transparency and bolster investor confidence.