IndiGo airlines' promoter Rakesh Gangwal's spat with co-founder Rahul Bhatia has come out in the open with Gangwal saying that even a "paan ki dukaan" (betel shop) would have managed matters with more grace.
Alleging that the company has "started veering off" from the core principles, Gangwal, who has 37 per cent stakes, has alleged serious governance lapses on part of Bhatia.
Rahul Bhatia and his affiliates (IGE Group) have about 38 per cent stakes in the parent company InterGlobe Aviation.
The differences within India's largest airline have been brewing from the past one year but they took a nasty turn after Gangwal reached out to Sebi to intervene and settle the matter.
In a letter to Sebi, Gangwal has flagged concerns about certain questionable Related Party Transactions (RPTs) with the IGE Group, saying that the shareholders' agreement provides his long-time friend Bhatia unusual controlling rights over IndiGo.
"Beyond just questionable Related Party Transactions, various fundamental governance norms and laws are not being adhered to and this is inevitably going to lead to unfortunate outcomes unless effective measures are taken today," the letter said.
A copy of the letter has also been sent to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, Civil Aviation Minister Hardeep Singh Puri and Commerce Minister Piyush Goyal among others.
In a filing to the stock exchanges, InterGlobe Aviation said that Sebi has also sought a response on the letter by July 19, 2019.
Gangwal has also been seeking an Extra-Ordinary General Meeting (EGM) to put in place reasonable procedures and safeguards with respect to related party transactions with Bhatia.
Gangwal wrote to the board of InterGlobe Aviation seeking the meeting, Bhatia, on June 12, opposed the proposal.
Bhatia wrote to the board alleging that the genesis of Gangwals' angst was his "hurt ego" and refusal of IGE Group to entertain his "unreasonable demands".
In the June 12 letter, Bhatia alleged that Gangwal had a hidden agenda and had made a package proposal and was not willing to discuss the RPT issue in isolation.
As per the current agreement, the IGE Group's rights include those to appoint three out of six directors, nominate and appoint Chairman, CEO, President as well as a voting arrangement that requires Gangwal and his affiliates to vote alongside the Group on the appointment of directors, Ganwal has written in his letter.
"The process of appointing an Independent Chairman at IndiGo is the classic 'Hobson's choice' and a sophisticated way to circumvent Sebi rules...," the letter said.
IndiGo CEO, however, issued a statement to its employees saying that the issues between promoters have nothing to do with the airline and its functioning.
IndiGo that has a market share of around 49 per cent holds more than 200 planes and operates around 1,400 flights daily.
(With inputs from PTI)
