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IndiGo promoters' spat: Gangwal says Bhatia's plea in US court redundant; violates LCIA clause

Bhatia had last month filed a case against co-founder Rakesh Gangwal in a Florida district court, seeking information on the violation of the shareholders' agreement signed between them in April 2015

twitter-logo BusinessToday.In   New Delhi     Last Updated: November 11, 2019  | 13:49 IST
IndiGo promoters' spat: Gangwal says Bhatia's plea in US court redundant; violates LCIA clause
The shareholders' pact between Bhatia and Gangwal will expire this month

In the latest turn of events in the InterGlobe Aviation saga, InterGlobe Aviation co-founder Rakesh Gangwal has termed the application moved by his partner Rahul Bhatia, seeking documents related to Gangwal as "redundant". Calling it a blatant attempt to jump the gun, Gangwal said the law invoked (by the Bhatia camp) to seek documents does not apply to "private commercial arbitrations".

"Respondents are fully participating in that process and will cooperate with the document disclosure procedures laid down by the arbitral tribunal. The current application is thus wholly unnecessary and redundant, and is a blatant attempt to 'jump the gun' and get one-sided discovery outside the framework created by the arbitration clause and the LCIA India Rules," Gangwal's response said, reported The Economic Times. As per Gangwal's reply, the Bhatia group had, in fact, violated the London Court of International Arbitration clause by filing a separate plea.

While the Bhatia group has appointed Jan Paulsson, a partner of Three Crowns law firm in Washington, as its arbitrator in the case, Gangwal's RG Group has roped in Stephen Ruttle, a barrister with Brick Court Chambers in London, the daily reported.

Bhatia had last month filed a case against co-founder Rakesh Gangwal in a Florida district court, seeking information on the violation of the shareholders' agreement signed between them in April 2015.  The "documents and testimony" sought by Bhatia through the application pertained to events and relationships during a specific period, which, Bhatia alleged, Gangwal used to "dilute the critical controlling rights" of his IGE Group in InterGlobe Aviation.

Also read: IndiGo promoters' spat: Bhatia drags Gangwal to Florida court; seeks info on breach of shareholders' pact

He has also filed another case against IndiGo Independent Director Anupam Khanna and Gangwal in a Maryland District Court, alleging Khanna "acted in concert" with Gangwal to violate the shareholders' agreement. The Bhatia-controlled group intends to use records obtained through these cases to support his claims for the arbitration case filed in the London Court of International Arbitration, India.

Notably, the shareholders' pact between Bhatia and Gangwal will expire this month.

Gangwal and Bhatia had been sparring over questionable related-party transactions and composition of the company's board, which Gangwal had flagged off as "serious corporate governance lapses" in India's largest airline company. While Bhatia and his InterGlobe Enterprises (IGE) Group own around 38 per cent of the airline, Gangwal and his affiliates own a 36.68 per cent stake.

The spat between the two cofounders emerged in July after Gangwal first complained to the Securities and Exchange Board of India alleging that Bhatia indulged in questionable related-party transactions. According to him, the shareholders' agreement provided Bhatia unusual controlling rights over IndiGo. He stated that the company "started veering off" from the core principles and values of governance that made the company what it was today.

Also Read: IndiGo promoters' spat not over, Gangwal writes to Sebi urging action against team Bhatia

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