SC asks Kirloskar family to mediate, not litigate

"We both (judges) feel it is one of the reputed families and company. We feel the issues are sorted out by mediation or arbitration which is better in the interest of the company and the industry," it said.

Observing that litigation is not good for the group and the industry, the Supreme Court on Tuesday asked warring Kirloskar brothers – Sanjay, Atul and others — to explore the possibility of mediation and suggest names of some “common friends” who can help in resolving the long-standing family feud over the division of assets.

A bench comprising Chief Justice NV Ramana and Justice Surya Kant also suggested appointing a former SC judge to help, in case the family wanted, to mediate the long-standing dispute.

“We both (judges) feel it is one of the reputed families and company. We feel the issues are sorted out by mediation or arbitration which is better in the interest of the company and the industry,” it said.

“You go on litigating in the civil courts, you know. I don’t want to comment on the system. All the lawyers can sit together and find a way out and if you want some external assistance, we can appoint some retired judge. Why do you unnecessarily want to fight this litigation? You can have some alternative resolution. There must be some common family friends and they can mediate,” the CJI said while asking the parties to maintain the status quo on all related cases. It posted the matter for further hearing after six weeks.

It may be noted that the earlier round of mediation in 2017 had failed when eminent 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.

The apex court’s suggestion came on an appeal filed by Sanjay Kirloskar, CMD of Kirloskar Brothers (KBL), a pump manufacturing company, against the Bombay High Court’s June 21 order that sent the family dispute for arbitration.
Opposing any fresh arbitration, Sanjay told the SC that the HC “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 feud is over DFS which was arrived on September 11, 2009, to decide the fate of assets of the 133-year-old company. Sanjay wants the dispute to be decided in a Pune civil court but the HC sent the entire dispute to arbitration as per the family settlement.

He claimed that his brothers also violated the non-compete clause of the settlement in 2017 by acquiring La Gajjar Machineries while managing Kirloskar Oil Engines, where they allegedly manufactured and advertised for submersible pumps, which is the core specialisation for KBL. Besides, he accused Atul and Rahul of ousting him from Kirloskar Proprietary (KPL), which was incorporated in 2017 to protect all trademarks of the group company. The family settlement prohibits any party or any Kirloskar Group company under their control from competing with one another.

While Sanjay filed a civil suit in 2018 to implement the DFS, stop other group companies from competing in the pump manufacturing business and sought Rs 750 crore as damages for breaching the non-compete clause by the acquisition of La Gajjar Machineries and advertisements of submersible pumps, Atul, Rahul and others moved the HC claiming that the Pune court proceedings were not maintainable as Kirloskar Oil Engines, La Gajjar and KPL weren’t signatories to DFS.