**Title:** Kirloskar Group Companies Challenge SEBI Disclosure Regulations
**Meta Description:** Five Kirloskar Group firms contest SEBI’s disclosure rules in Bombay High Court, citing concerns over constitutional validity and implications for corporate governance.
**URL Slug:** kirloskar-group-sebi-disclosure-challenge
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**Kirloskar Group Companies Challenge SEBI Disclosure Regulations in Court**
In a significant development in the ongoing Kirloskar family dispute, five publicly listed companies from the Kirloskar Group have filed petitions in the Bombay High Court contesting the constitutional validity of a regulation that requires the disclosure of private agreements by promoters, directors, and other stakeholders. The companies involved—Kirloskar Oil Engines Ltd (KOEL), Kirloskar Ferrous Industries Ltd, Kirloskar Pneumatic Company Ltd, Kirloskar Industries Ltd, and GG Dandekar Properties Ltd—are challenging the regulations set forth by the Securities and Exchange Board of India (SEBI).
The petitions, which have been reviewed, argue that SEBI’s disclosure requirements are “manifestly arbitrary,” “disproportionate,” and “impermissibly retrospective.” The companies contend that the regulator has exceeded its authority by effectively forcing listed entities to treat third-party agreements—some of which they have not signed or ratified—as binding and material to their operations.
The Bombay High Court has requested a response from SEBI and is scheduled to hear the case on August 20. The outcome of this legal battle could have far-reaching consequences for corporate disclosure practices, especially for firms with intricate ownership structures or family-led governance.
The petitioners are specifically contesting Regulation 30A and Clause 5A of Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, along with SEBI circulars issued on July 13, 2023, and November 11, 2024, which implemented these rules. These regulations mandate that listed companies disclose certain agreements, even if they are not direct parties, if such agreements affect the company’s management, control, or impose any restrictions or liabilities.
Additionally, the companies are challenging Regulation 30(13), which requires listed entities to promptly disclose significant communications from regulatory, statutory, enforcement, or judicial authorities. The petitioners argue that these regulations contradict the fundamental principle of ‘consent’ or ‘consensus ad idem,’ which is essential for contract formation under the Indian Contract Act.
This legal action arises amid a protracted family feud over a 2009 ‘Deed of Family Settlement’ (DFS), which delineated the distribution of control, management, and ownership among various branches of the Kirloskar family. Kirloskar Brothers Ltd, led by Sanjay Kirloskar, has insisted that KOEL and other group firms disclose the DFS under Regulation 30A. However, KOEL asserts that it is not a party to the DFS and should not be obligated to disclose it. In a communication from December 2024, SEBI advised KOEL to disclose the DFS, further complicating the situation.
As this case unfolds, it will be crucial to monitor its implications for corporate governance and disclosure norms in India.
**FAQ**
**Q: What are the main concerns raised by the Kirloskar Group companies regarding SEBI’s disclosure regulations?**
A: The Kirloskar Group companies argue that SEBI’s disclosure regulations are arbitrary, disproportionate, and infringe on their rights by compelling them to disclose third-party agreements that they have not signed or ratified.