Arbitration award settles IndiGo row
The battle between the Indigo promoters Rahul Bhatia and Rakesh Gangwal appears to have been settled -- at least for now — after a London court handed down a final arbitration award.
But neither side is prepared to disclose the specific details of the award given two days ago by the London Court of International Arbitration (LCIA).
All that InterGlobe Aviation, the parent of Indigo Airlines and a listed entity, said in a terse regulatory filing was that it had received no directions under the terms of the award.
It also said the award “directs the reimbursement of costs incurred by the company” in relation to the arbitration proceedings initiated by InterGlobe Enterprises (IGE) in October 2019.
The spat between the two promoters had turned very ugly two years ago after Gangwal, a Florida-based former airline executive turned entrepreneur, accused Bhatia of running the parent company of Indigo Airline like a “paan ki dukaan” with abysmal corporate governance standards.
The Gangwal group has a stake of around 36.63 per cent in InterGlobe Aviation while the Bhatia group has a shareholding of 38 per cent.
Gangwal has complained about a one-sided agreement he had signed with Bhatia that conferred on the latter “unusual rights” that allowed his entities to strike dodgy supplier agreements with the airline that violated governance codes on related party transactions.
Riled by that jibe, Bhatia had riposted: “The Paan ki dukaan continues to do well; it is financially sound and it is run well by a competent set of managers.”
In October 2019, InterGlobe Enterprises (IGE) and Bhatia had filed for arbitration proceedings against Gangwal, the Chinkerpoo Family Trust and Shobha Gangwal (collectively called the RG Group).
Though InterGlobe Aviation was named as a respondent no monetary claims, including any compensation, was sought from the company.
The IGE Group had sought certain reliefs against the other party, including in relation to compliance with the shareholders’ agreement and the company’s Articles of Association (AoA) as well as damages.
“The RG Group also sought certain reliefs against the IGE Group, including to carry out all requisite steps and actions, provide consents and assistance to remove certain transfer restriction provisions from the company's articles," InterGlobe Aviation said in its latest regulatory filing.
Differences between the two promoters had come out in the open in July 2019, after Gangwal shot off a letter to Securities and Exchange Board of India (SEBI) seeking its intervention to address corporate governance issues in the company.
He had also raised questions about certain related party transactions (RPTs) between IndiGo and entities belonging to the IGE group. Gangwal alleged that these transactions between IndiGo and the IGE group did not have the approval of the board and the audit committee and were often backdated apart from also claiming that many of these RPTs undermined the interests of the airline.
Among others, he also alleged that there was misrepresentation in the company's Red Herring Prospectus (RHP) dated October 16, 2015.
The IGE group rejected all the charges.
Earlier, Gangwal’s request for an extraordinary general meeting to discuss the affairs of the company was turned down by a 4:2 vote at a board meeting on June 12 2019.
IndiGo later settled with market regulator SEBI the case of alleged corporate governance lapses and listing norms violations raised by Gangwal. The company settled the matter without admitting or denying any violation on its part by paying a settlement charge of Rs 2.1 crore.