No restriction on Kirloskar Industries selling shares in Kirloskar Brothers, rules NCLT

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Kirloskar Group's promoter family, the National Company Law Tribunal (NCLT) on Tuesday allowed Kirloskar Industries Limited (KIL) and its promoters Atul Kirloskar and Rahul Kirloskar to sell their stakes in Kirloskar Brothers Limited (KBL). The Mumbai bench of the tribunal agreed that petitioners KIL and Atul and Rahul Kirloskar have been able to make out a case of oppression and mismanagement against KBL.

However, the tribunal directed the petitioners to first make an offer for sale of their shares to KBL chairman Sanjay Kirloskar and his kin, in keeping with the spirit of a deed of family settlement (DFS) entered by members of the family in 2009. If the second party fails to make a binding offer within 30 days, the shares can then be sold to a third party.

If the second party buys the shares of KBL from KIL, such a transfer would be between promoters of the company and, thus, would be considered an inter-se transfer, not triggering the requirement to make an open offer, the tribunal further observed.The fourth generation of the Kirloskar family is engaged in a protracted feud and has multiple ongoing legal disputes. On one side are brothers Atul Kirloskar and Rahul Kirloskar, along with multiple members of the industrialist family, while on the other end is their estranged brother Sanjay Kirloskar.The tribunal also pulled up KBL, observing that the affairs of the listed company were not being conducted in a “completely transparent and independent manner".

The company’s actions were “definitely influenced and coloured by the aspirations" of Sanjay Kirloskar and his family members, the tribunal said in its 73-page order.KIL and other petitioners collectively hold 24.92% stake in KBL. Sanjay Kirloskar and his family own