Supreme Court appoints retired Justice L Nageswara Rao as mediator in ₹1 lakh crore Kalyani family feud

The Supreme Court on Monday appointed former Supreme Court Justice L Nageswara Rao to mediate the family dispute involving Bharat Forge Chairman Baba Kalyani and his sister Sugandha Hiremath over assets estimated to be worth more than ₹1 lakh crore [Sugandha Hiremath v. Baba Kalyani].

A Bench of Chief Justice of India (CJI) Surya Kant , Justices Joymalya Bagchi and V Mohana persuaded the parties to explore the possibility of an amicable settlement.

Thereafter, the Bench appointed the retired apex court judge as mediator.

“We request Justice L Nageswara Rao to act as a mediator,” the Court ordered.

Senior counsel appearing for both sides assured the Bench that they would contact Justice Rao during the day so that the mediation process could begin on Tuesday.

The Supreme Court listed the matter after two weeks.

It also directed the Bombay High Court not to proceed with Baba Kalyani’s application seeking rejection of Hiremath’s suit under Order VII Rule 11 of the Code of Civil Procedure.

The proceedings before the Supreme Court arose from a May 4 judgment of the Bombay High Court refusing to refer the dispute to mediation because Kalyani had not consented to it.

The underlying suit was filed by Sugandha and her husband Jaidev Hiremath before the Bombay High Court in 2023. They sought specific performance of an alleged family arrangement reached in June 1994 between Baba Kalyani and his father Neelkanth Annappa Kalyani.

According to Hiremaths, the arrangement required shares held by Kalyani family-controlled entities in listed specialty chemicals company Hikal Limited to be transferred to Sugandha.

At present, the Hiremath family and entities controlled by it hold around 34.84 per cent of Hikal. Kalyani Investment Company Limited and BF Investment Limited hold approximately 34.01 per cent.

According to the Hiremaths, enforcement of the 1994 arrangement would increase their shareholding to about 68.85 per cent and give them majority voting rights in Hikal.

The Kalyani side has denied that any enforceable arrangement requiring the transfer of the shares was concluded. It has also disputed the Hiremaths’ interpretation of a handwritten note prepared by Neelkanth Kalyani after a family meeting in 1994.

The Hikal proceedings form one part of a wider dispute among Baba Kalyani, Sugandha Hiremath, their brother Gaurishankar Kalyani and their respective children.

The wider litigation concerns assets claimed by the Hiremath side to be belonging to the Kalyani family’s Hindu Undivided Family.

These allegedly include promoter stakes in listed companies such as Bharat Forge and Kalyani Steels, shares in private companies, land, real estate, jewellery, bank deposits and other properties.

Sugandha’s children Sameer Hiremath and Pallavi Swadi have separately instituted partition proceedings claiming rights as coparceners in the alleged Kalyani Family HUF. The Kalyani side has denied the existence of such an HUF and maintained that the businesses and properties are not joint family assets available for partition.

Several connected partition, property and probate proceedings are pending before courts in Mumbai, Pune, Wai and Karad.

In May, Bombay High Court Justice Rajesh S Patil had rejected the Hiremaths’ request for mediation after noting that earlier settlement efforts before the Supreme Court and the Pune District Court had failed.

During the hearing of the matter today before the apex court, the CJI urged Kalyani’s counsel to reconsider the opposition to mediation expressed before the High Court.

“You may have said no to mediation earlier, but when Court 1 of the Supreme Court requests, will you not heed to it? Mediation can be successful when stalwarts from either side step in and help in the same,” the CJI remarked.

Justice Bagchi added that “there cannot be a hostile approach to mediation.”

The CJI expressed confidence that the process would succeed.

“Sometimes ego is more than the assets. I am sure mediation will succeed,” he said.

Senior Advocates Kapil Sibal, Mukul Rohatgi, Abhishek Manu Singhvi and Aryama Sundaram appeared for Kalyani

Sibal and Sundaram were briefed by Khaitan & Co

Singhvi was briefed by Agarwal Law Associates

Rohatgi was briefed by Advocate Anand Sreedhar.

Senior Advocate Shyam Divan and Gaurav Pachnanda appeared for Hiremath with a team from Karanjawala & Co led by Senior Partner Ruby Singh Ahuja.

[Read Order]