In a relief to brothers Rahul and Atul Kirloskar, the Mumbai bench of the National Company Law Tribunal (NCLT) has dismissed the maintainability petition filed by their sibling Sanjay Kirloskar-controlled company Kirloskar BrothersNSE -1.61 % (KBL). BSE-listed KBL has challenged the jurisdiction of the tribunal to entertain the petition filed by Kirloskar Industries (KIL).
Maintainability petition decides whether a case can be legislated in a court of law.
Atul Kirloskar-controlled Kirloskar Industries had initially filed a petition at the NCLT in 2017 to oust sibling Sanjay Kirloskar as chairman and managing director of Kirloskar Brothers, alleging oppression and mismanagement in the group’s flagship company. The petition also sought the removal of the rest of the current board members and appointment of their own nominees on the board. The petition also sought to highlight the difficulties Rahul and Atul had over either purchasing or selling shares of KBL.
KBL argued that the contention raised by Atul and Rahul over shares can be contested before Sebi as the market regulator has the sole jurisdiction to look into the matter, and not the NCLT.
“It is pertinent to mention that the main relief sought in the petition under Section 241 and 242 of the Companies Act are the relief based on the alleged act of irregularities of the compliance officer of the respondent the company,” observed the division bench presided over by VP Singh and Ravikumar Duraisamy.
The tribunal, in its 14-page order, while dismissing the maintainability application filed by Kirloskar Brothers also observed that “the jurisdiction of NCLT regarding the alleged act of oppression and mismanagement under section 241 and 242 of the Companies Act, 2013 is exclusive.”
The genesis of the dispute in the 130-year-old group lies in the deed of family settlement (DFS) that happened in 2009. The Kirloskars had entered a DFS in 2009 to distribute their assets in the form of shares of various companies of the group and cash held in trust and investment companies, among them, signatories of DFS, to avoid a potential dispute within the family.
However, in 2017, Rahul and Atul approached the NCLT with claims that the board’s continuing rejection of their pre-clearance request contravened the letter and spirit of the DFS.
“The matter being sub judice, we have no comment to make in this regard,” said Ashwini Mali, company secretary of Kirloskar Industries, in an email response. While, KBL spokesperson said, “We are challenging the order at NCLAT. We have no choice but to challenge the order.”
Source: Economic Times