IndiGo co-founder and group Managing Director of InterGlobe Enterprises (IGE Group) Rahul Bhatia Tuesday submitted an arbitration request before the London Court of International Arbitration (LCIA) against partner Rakesh Gangwal.
Bhatia forwarded the request against Gangwal on compliance issues with the shareholders' agreement and articles of association in the company. "The company has been named as a necessary and proper party to the arbitration. However, presently, no monetary claim, including any compensation or penalty, has been sought against the company," IndiGo said in a BSE filing.Also Read: IndiGo promoters' spat not over, Gangwal writes to Sebi urging action against team Bhatia
The shareholders' agreement, which was signed in April 2015, is going to expire soon. Gangwal early this month had written to SEBI again, urging action against him on the issues of governance.
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. IndiGo Chairman M Damodaran had also said that the aviation firm had submitted all documents related to the information sought by the Ministry of Corporate Affairs and Sebi.
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. 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.
Gangwal had issued a statement in August, saying he was satisfied with the new related party transactions (RPTs) protocols approved by the board and was open to the amendments in the IndiGo's Articles of Association (AoA) to increase the board strength to 10. The statement came as a surprise because Gangwal agreeing to a 10-member board (and not seven as he has proposed earlier) still left his previous issue unresolved.
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.