Kirloskar Brothers dispute: Supreme Court clears ICA arbitration

What the Supreme Court order changes

The Supreme Court has directed the Indian Council of Arbitration (ICA) to proceed with the appointment of a sole arbitrator in a dispute involving Kirloskar Brothers Limited (KBL) and related parties. The Court’s order makes it clear that arbitral proceedings should not be stalled because one party refuses to pay arbitration fees and expenses upfront. The appointment is to be made by the ICA, and the arbitrator is to be a former judge of the Supreme Court.

A key point in the order is how arbitration costs are to be handled when there is disagreement over fee payment in advance. The Court noted that, as per ICA rules, costs and expenses incurred on arbitration can be included in the final award. The question of proportionate liability, meaning who pays what share of costs, has been left open for adjudication by the learned arbitrator once appointed.

The core dispute over arbitration fees and expenses

The background presented indicates that the respondent declined to share arbitration costs and expenses “in advance”. In response, the matter reached the Court, with the petitioners indicating that the court action was likely intended to create hurdles in the arbitration process.

The Supreme Court’s order, even if indirectly phrased, signals that parties cannot withhold fees and then seek judicial intervention to stall arbitral proceedings. Instead, the arbitration should proceed, and the dispute about cost allocation can be decided within the arbitration framework.

Direction to ICA: appoint a former Supreme Court judge

In the operative direction, the Court instructed the ICA to appoint a former judge of the Supreme Court as the sole arbitrator. This is a specific instruction that pushes the process forward regardless of the fee dispute.

The order also states that the contention regarding the parties’ proportionate liability for arbitration costs and expenses is left open. That means the arbitrator, once appointed, will decide how the costs and expenses should be borne by the parties in accordance with the ICA rules.

What the Court left for the arbitrator to decide

The Supreme Court did not decide the split of arbitration costs between the parties at this stage. Instead, it explicitly left the issue for adjudication by the arbitrator.

It also noted the ICA rule position that arbitration costs and expenses can be included in the final award. This approach is important in fee disputes because it enables the arbitration to move ahead while preserving each party’s right to argue about costs later.

Case details: petition number and disposal

The matter is recorded as Arbitration Petition No. 50/2025, titled Kirloskar Brothers Limited & Another vs Indian Council of Arbitration (ICA) & Others, under the Supreme Court’s civil original jurisdiction.

The order records that the petition was called on for hearing on 19-01-2026, and that upon hearing counsel, the petition was disposed of in terms of the signed order. It also notes that all pending applications, if any, were disposed of.

Wider Kirloskar family dispute: mediation and arbitration history

The arbitration-related litigation sits within a longer-running Kirloskar family dispute connected to a deed of family settlement and group assets. Earlier reporting referenced proceedings where KBL’s Chairman and Managing Director Sanjay Kirloskar challenged a Bombay High Court order directing arbitration.

On 27 July 2021, the Supreme Court ordered status quo in the dispute and asked parties to explore mediation, including suggesting the possibility of using a retired judge as mediator. A bench comprising Chief Justice N V Ramana and Justice Surya Kant issued notice and sought responses within six weeks, while also encouraging mediation.

The record also notes that mediation under former Supreme Court judge Indu Malhotra later failed, after which the Supreme Court agreed to hear the matter on March 15.

Interim order continuity and pending High Court outcome

Separately, a bench comprising Justices Manoj Misra and Manmohan disposed of appeals filed by Kirloskar Proprietary Limited against Kirloskar Brothers Limited. The bench held that the operative portion of its interim order dated October 17, 2025 would continue to operate, subject to the final outcome of an appeal pending before the Bombay High Court.

This indicates that multiple proceedings and interim directions have been running in parallel, with some issues still tied to the eventual outcome of pending High Court litigation.

Key dates and directions at a glance

Market and governance relevance for investors

While the material provided does not mention any stock price moves, the proceedings are relevant for investors tracking governance and litigation risk around a listed group entity. Long-running disputes over settlement deeds, arbitration clauses, and the cost mechanics of arbitration can influence how quickly legal issues move toward resolution.

The latest Supreme Court direction is procedural but significant because it reduces the scope for delay tactics tied to fee disputes. By asking the ICA to appoint a sole arbitrator and leaving cost sharing to the arbitrator under ICA rules, the Court has reinforced that arbitration should proceed on timetable even when parties disagree on upfront payment.

Why the fee-stalling question matters in arbitration

In arbitration, delays often arise when parties contest preliminary procedural steps, including fee deposits and tribunal appointments. The Court’s approach in this matter keeps the door open for cost allocation arguments, but only after the arbitration is underway and governed by applicable rules.

The order’s crux is that refusal to share costs “in advance” does not prevent the tribunal from moving forward, especially where the rules allow costs to be included in the final award. The arbitrator’s role becomes central, both for the merits of the dispute and for cost allocation.

Conclusion

The Supreme Court’s 19 January 2026 order directs the ICA to appoint a former Supreme Court judge as the sole arbitrator in Arbitration Petition No. 50/2025 and keeps the arbitration moving despite a fee dispute. It also leaves the question of proportionate liability for arbitration costs and expenses to the arbitrator’s adjudication under ICA rules. The next procedural milestone, based on the order, is the ICA’s appointment of the arbitrator and the commencement of proceedings where cost allocation can be argued alongside the substantive issues.