Authority: Supreme Court of India
Order Date: 11 August 2026 (digital signature dated 23 August 2026 16:57:55 IST)
Case Overview
- Parties: Appellant – Kirloskar Brothers Limited; Respondents – Atul Chandrakant Kirloskar & others; additional respondent No.28 – M/s Vahine Engineering.
- Background: The dispute stems from a Deed of Family Settlement (DFS) dated 11 September 2009 among Kirloskar family members (Sanjay Kirloskar, Atul Kirloskar, Vikram Kirloskar, Rahul Kirloskar, and the late Gautam Kulkarni). Clause 20 of the DFS mandates arbitration for any issue arising out of its interpretation. Clause 15 imposes a non‑compete restriction.
- Allegations: Kirloskar Brothers alleges that Kirloskar Oil Engines Ltd (Respondent No.21) breached Clause 15 by acquiring La‑Gajjar Machineries Pvt. Ltd (Respondent No.22). Additionally, Sanjay Kirloskar (Respondent No.27) claims he was not re‑appointed to the board of the trademark‑holding company (Respondent No.23).
- Procedural History:
- Mediation attempted with Dr. Vijay Kelkar (June 2017 – May 2018) but failed.
- Special Civil Suit No. 798/2018 filed in Pune Civil Court (June 2018) seeking specific performance of the DFS, damages, injunction, and board reconstitution.
- Several respondents filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 seeking referral to arbitration; the Civil Judge rejected it on 7 December 2020.
- The rejected application was appealed to the Bombay High Court (Arbitration Appeal (ST) No. 1661/2021). The High Court, in its impugned judgment dated 3 May 2021, allowed the appeal and referred the dispute to arbitration, noting that any questions on the scope of Clause 20 and the status of non‑signatory respondents should be decided by the arbitral tribunal under Section 16.
Supreme Court Findings & Directions
1. IA No. 23115/2022 is allowed; Vahine Engineering is impleaded as Respondent No. 28 and the memo of parties is to be amended.
2. Leave is granted to the appeals.
3. The Court finds that the questions concerning the ambit of Clause 20 (whether it covers specific performance, damages, injunction) and the binding nature of the arbitration agreement on non‑signatory respondents are intertwined factual‑legal issues that cannot be resolved at the Section 8 stage; they must be examined by the arbitral tribunal.
4. Accordingly, the Court holds that the High Court did not err in declining to make a final determination and therefore does not interfere with the High Court’s order.
5. The appeals are disposed of in accordance with the signed order.
6. Given the large number of parties and the complexity of the dispute, the Court deems it appropriate to constitute a three‑member arbitral tribunal.
7. Appointment of Nominee Arbitrators:
- Justice Nitin Madhukar Jamdar, former Chief Justice, Kerala High Court, nominated by the Petitioner.
- Justice K.R. Shriram, former Chief Justice, Madras and Rajasthan High Courts, nominated by the contesting Respondents.
8. The two nominee arbitrators shall jointly appoint the Presiding Arbitrator within four weeks of this order.
9. The seat of arbitration is fixed at Pune.
10. All contentions on arbitrability, including the true scope of Clause 20 and the applicability to non‑signatory respondents, are left open as preliminary issues for the arbitral tribunal before it proceeds to the merits.
11. Observations made by the High Court are limited to the appointment of arbitrators and shall have no binding effect on the arbitral tribunal.
12. The arbitral tribunal is empowered to fix its own procedure and remuneration.
13. Any pending interlocutory applications, if any, stand disposed of.
Final Outcome
- The Supreme Court dismissed the appeals, allowed the intervention to add Vahine Engineering, granted leave, and ordered the constitution of a three‑member arbitral tribunal with the specified former chief justices as nominee arbitrators, seat Pune, leaving all arbitrability and substantive issues to be decided by the tribunal.
Topics: Arbitration, Family Settlement Dispute