In the latest turn of events in the InterGlobe Aviation saga, IndiGo co-founder and group Managing Director Rahul Bhatia has filed another case against co-founder Rakesh Gangwal in a Florida district court. Bhatia's application for the case, filed on October 15, seeks information on the violation of the shareholders' agreement signed between them in April 2015. The "documents and testimony" sought by Bhatia through the case pertains 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.
"Petitioners seek to obtain documents and testimony related to breaches by Gangwal and/or the other members of the RG Group (owned by Rakesh Gangwal and affiliates) of the Second SHA and their obligations to perform the Second SHA in good faith under Indian law," says the application, reported The Economic Times.
Bhatia had recently filed a case against IndiGo Independent Director Anupam Khanna and Gangwal in a Maryland District Court. He has alleged that Khanna "acted in concert" with Gangwal to violate the shareholders' agreement. Bhatia has also sought information related to correspondence between Gangwal and Khanna through a subpoena filed in the court.
As reports suggest, the records obtained from these cases could be used during arbitration to support the case Bhatia has filed in the London Court of International Arbitration (LCIA), India, over the alleged violation of the shareholders' agreement. The shareholders' pact between Bhatia and Gangwal will expire in November.
During the Annual General Meeting on August 27, both the promoter groups voted in favour of all resolutions, including amending the Articles of Association, expanding the size of the board to 10 members, and appointing the chairman as an independent director.
Before that, 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.
Post the amendments, IndiGo's board strength has been increased to 10 from the previous six members. In a 10-member board, the Bhatia camp will have the right to nominate five, and Gangwal two. This is far higher than the arithmetically-sound seven-member board proposed by Gangwal in his letter to the board on August 5.
Incidentally, Gangwal did not attend the IndiGo's AGM on August 27. Not just Gangwal, his nominee on the board Anupam Khanna also skipped the meet, leaving the remaining four board members - Rahul Bhatia, Rohini Bhatia, Anil Parashar, and M Damodaran - to answer all uncomfortable questions by the shareholders.
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.
Edited by Manoj Sharma