New Delhi: The Supreme Court on Tuesday maintained status quo on the family dispute related to assets of the Kirloskar group and asked the members of the 130-year-old corporate entity to try and settle the dispute through mediation rather than pursue litigation.
The apex court was hearing a petition by Sanjay Kirloskar and his company, Kirloskar Brothers Limited (KBL), which filed an appeal against a Bombay high court decision of May 3, 2021 by which a suit pending between Sanjay and his brother Atul Kirloskar before a Pune court was referred to arbitration.
The bench of chief justice of India (CJI) NV Ramana and justice Surya Kant issued notice on the petition and said, “It is better that you sort out the dispute through mediation in the interest of the company. You will unnecessarily go on litigating in the trial court. Why continue to fight through litigation.”
The bench issued notice on the appeal and posted the matter after six weeks. It said, “Mediation is the best solution. Let all counsels appearing on both sides sit and decide on mediation. If you need any external assistance, we can provide a retired judge to mediate. You can suggest names as mediators. You are a reputed business house. There must be common family friends and business people who can help.” To facilitate the mediation, the court directed “status quo to be maintained on all proceedings.”
Senior advocates Kapil Sibal and Abhishek Manu Singhvi, who appeared for Sanjay and KBL, informed the court that the order of the high court was wrong as it allowed parties who were not signatories to the Deed of Family Settlement (DFS) to join arbitration. The DFS contained an arbitration clause to which the non-signatories had stated before the high court that they are not bound. Despite this categoric submission by the non-parties to DFS, the high court erred in noting that the parties had agreed to arbitration.
{{/usCountry}}Senior advocates Kapil Sibal and Abhishek Manu Singhvi, who appeared for Sanjay and KBL, informed the court that the order of the high court was wrong as it allowed parties who were not signatories to the Deed of Family Settlement (DFS) to join arbitration. The DFS contained an arbitration clause to which the non-signatories had stated before the high court that they are not bound. Despite this categoric submission by the non-parties to DFS, the high court erred in noting that the parties had agreed to arbitration.
{{/usCountry}}“How can a party say that (I) agree to be in arbitration but cannot be bound by it,” asked Sibal.
The dispute in the proceedings arose after KBL filed a suit before a Pune court seeking ₹750 crore damages against Atul Kirloskar and Rahul Kirloskar for violating the terms of the DFS.
Sanjay accused his brothers of acquiring 75% stake in a pump manufacturing company, La Gajjar Machineries Private Limited. The DFS provides that no member in the family will compete with any other member in business. Since Sanjay and his firm was already in the business of manufacturing pumps, he challenged the competing business interest by his brothers.
In his petition, Sanjay said: “Since all the parties to the suit are not signatories to the DFS and the arbitration agreement, it was not open to the high court to have made an arbitral reference, without determining the existence of a binding arbitration agreement by and between all the parties, whether signatories or not.”