SEBI ignited a corporate firestorm back in 2023 when it unleashed Regulation 30A under the Listing Obligations and Disclosure Requirements (LODR), which was to pierce the veil of secrecy surrounding promoter family agreements. This clarion call for transparency was bolstered by insertion of Clause 5A that mandates disclosure of pacts or deeds impacting listed companies’ control or management, even if the company wasn’t a signatory.
India’s corporate titans swiftly complied, but a high-stakes standoff involving Atul and Rahul Kirloskar led Kirloskar Oil Engines Ltd. (KOEL) and its affiliates has erupted into a governance firestorm and legal battle, exposing the pivotal yet faltering role of Independent Directors. With former SEBI heavyweights Dr. K. M. Abraham and Vinesh Kumar Jairath on KOEL’s board, their reluctance to steer the company toward swift compliance amid a labyrinth of legal manoeuvres raises alarms about investor interest in a saga dripping with delay and defiance.
Independent Directors: Guardians or Gatekeepers?
Independent directors are the linchpin of investor protection, tasked by SEBI’s 2021 stewardship code and LODR guidelines with ensuring minority shareholders aren’t left in the dark. In promoter-driven firms like KOEL, their role is sacrosanct, especially under Regulation 30A’s spotlight.
Dr. K. M. Abraham, a former SEBI Whole-Time Member (2010–2013) who shaped enforcement policies and was strict especially on disclosure related matters, and Vinesh Kumar Jairath, a Non-Executive Director and former SEBI board member (2004–2007) instrumental in securities reforms, bring unparalleled regulatory clout to KOEL’s boardroom. Their presence promised a gold standard of governance.
Yet, as KOEL wages a relentless battle to delay disclosing the Kirloskar 2009 Deed of Family Settlement (DFS), the board’s acquiescence has sparked serious concerns about its commitment to investor transparency. Why have these regulatory titans, armed with insider knowledge of SEBI’s playbook, failed to champion the transparency KOEL’s investors deserve? The Kirloskar saga is a screaming wake-up call: even the most credentialed directors risk falling short if they don’t assert independence against promoter-driven agendas.
A Corporate Gold Standard Shines - Except in One Corner
India’s corporate giants have embraced Regulation 30A with gusto, setting a blazing trail of transparency. Amongst them:
● TVS Group: Unveiled inter-se family pacts during restructuring, laying bare their dealings for
investors.
● DCM Ltd: Swiftly reported historic arrangements, honouring SEBI’s call.
● Hikal Ltd: Filed promoter agreements affecting control, earning plaudits for compliance.
● Adani Wilmar Ltd: Disclosed joint venture pacts impacting ownership, ensuring no secrets.
lingered.
These industry powerhouses have cemented SEBI’s vision: private promoter deals must face public scrutiny to protect minority shareholders. Yet, KOEL and its affiliates Kirloskar Industries, Kirloskar Ferrous, Kirloskar Pneumatic, and GG Dandekar stand as glaring outliers, entangled in a web of legal theatrics that have stalled disclosure of the DFS, a family pact with seismic implications for governance.
A Tangled Web of Delays: The Kirloskar Playbook
The 2009 DFS, carving out business domains and imposing non-compete clauses among Kirloskar family members is no mere family memo, it’s a ticking governance bomb. Sanjay Kirloskar led Kirloskar Brothers Ltd. (KBL) disclosed it to BSE and NSE in April 2016, pre-empting regulatory mandates. But KOEL and its allies have dodged the spotlight, weaving a multi- forum strategy that has stretched disclosure delays past 18 for over 10 months since SEBI’s December 2024 directive.
Courtroom and Arbitration Chaos (2017– 2024): Allegations that KOEL’s 2017 acquisition of La-Gajjar Machineries, a pump business, breached DFS non-compete clauses sparked civil suits in 2018, arbitration bids, and a 2024 Supreme Court showdown. These battles, fixated on enforceability, sidelined disclosure obligations.
SEBI’s Order and SAT Showdown (2024–2025): SEBI’s December 30, 2024, advisory demanded DFS disclosure, citing its ongoing impact. KOEL’s January 3, 2025, appeal to the Securities Appellate Tribunal (SAT) cried foul, claiming legal overreach. SEBI’s January 17 retort labelled the advisory non-appealable, but SAT’s deferral to April 7, 2025 after denying an urgent stay has kept investors waiting. KBL’s January 16 intervention bid, still pending, adds more knots to the tangle.
High Court Gambit (2025): During the pendency of the SAT appeal, in June 2025 five Kirloskar entities challenged Regulation 30A’s legality in the Bombay High Court, decrying its retroactivity. SEBI’s September 12 affidavit, allowing disclaimers for non-binding status, led to petition withdrawal on September 26. KOEL’s subsequent filing, claiming the DFS imposes “no enforceable restrictions,” drew KBL’s fiery accusation of misrepresentation.
This dizzying dance across exchanges, courts, and tribunals has turned a straightforward disclosure mandate into a marathon of obfuscation, leaving investors stranded in a fog of uncertainty. Where were the independent directors, entrusted to cut through such delays and uphold shareholder rights?
SEBI’s Stumble: A Regulatory Fumble?
SEBI’s April 2024 Supreme Court affidavit roared that the DFS must be “disclosed” to end “information asymmetry.” Its December 2024 order doubled down, branding the DFS as “Material”. But a September 2025 High Court affidavit, permitting disclaimers to dodge binding implications, handed KOEL a loophole. Its September 2025 filing exploited this, dismissing the DFS’s relevance, prompting KBL’s demand for exchange action. This regulatory backslide is alarming since SEBI has effectively diluted its own mandate, leaving investors with hollow disclosures and emboldening delay tactics. Independent directors should have seized this moment to push for unfiltered compliance, not acquiesce to qualified filings that mock the spirit of LODR.
Hidden Stakes: Why Disclosure Matters
The DFS’s explosive potential lies in its clauses, like a 2009, ₹250 crore share transfer of Toyota joint ventures to Vikram Kirloskar and his nominees as obligated by the DFS, raising red flags about related-party norms. Disclosures could bring these transactions, which were done by Atul & Rahul Kirloskar led companies to give effect to the DFS under scrutiny, alongside KOEL’s alleged 2017 non-compete breach via acquisition of La- Gajjar Machineries. By stalling, the board risks shielding governance lapses that investors have a right to probe.
The Governance Abyss: Where Are the Watchdogs?
Abraham and Jairath’s SEBI credentials should have made KOEL a beacon of compliance. Instead, their boardroom presence coincides with a strategy that prioritizes legal maneuvering over investor clarity. The spirit of SEBI’s guidelines demands independent directors act as sentinels, not silent partners, yet the prolonged delays suggest a troubling alignment with management. This isn’t just a Kirloskar problem, it’s a wake-up call for India’s markets, where independent directors must wield their expertise to enforce transparency, not enable obfuscation. Their failure to do so risks tarnishing their legacies and eroding investor trust in governance frameworks.
A Market on Edge: Will Transparency Prevail?
The Kirloskar drama is a high-voltage test of India’s corporate governance. While peers have embraced Regulation 30A, KOEL’s multi-forum marathon enabled by a board with unmatched regulatory insight threatens to undermine SEBI’s authority and investor confidence.
SEBI Chairman Tuhin Kanta Pandey recently remarked about Foreign investors not worrying to invest in India. SEBI's stance of opaque regulations and regulatory unpredictability could however heighten their concerns.
As SAT proceedings loom, the spotlight burns on independent directors to redeem their mandate. This saga screams for accountability: no company, no matter its legacy, can sidestep transparency when minority shareholders’ rights hang in the balance. India’s markets demand nothing less than fearless oversight to ensure governance doesn’t flicker out in the face of delay and distraction. |
