On January 29, 2020 InterGlobe Aviation Ltd, which runs India's largest airline IndiGo, scheduled Extraordinary General Meeting (EGM) to delete some provision from Article of Association (AoA) of the company. For the same purpose, presence of both the co-promoters, Rakesh Gangwal and Rahul Bhatia, was required. Since Rakesh Gangwal was absent, it provoked anger among the shareholders who were present in the meeting.
The Extraordinary General Meeting (EGM) was convened by Rakesh Gangwal to discuss various shareholders rights like selection and appointment of chairman and key management personnel that were allegedly misused by Bhatia, absence of a woman director, alleged Related-Party Transactions (RPTs) between IndiGo and companies affiliated to Bhatia’s InterGlobe Enterprise Group, among other things. Gangwal has sought deletion of various Articles pertaining to transfer and acquisition of the company’s shares, including the ‘Right to First refusal’ and ‘Tag Along Right’. If any member of the IGE Group, led by Bhatia, or RG Group wants to transfer shares to a third party, then the non-transferring group will have the ‘Right to First refusal’ subject to certain conditions. Similarly, the non-transferring group will also have the ‘Tag Along Right’ wherein it would have the option to sell some part of the shareholding.
But for the resolution to be approved, Gangwal needed the support of Rahul Bhatia-led group who holds 38.3 per cent along with family in the airline's holding company Inter Globe Aviation.
Differences between the promoters cropped up when Gangwal had raised questions over corporate governance practices at IndiGo alleging violation of Related Party rules by fellow promoter Rahul Bhatia-led group. Gangwal said he had not expected that over the years, Bhatia “would start building an ecosystem of other companies that would enter into dozens of Related-Party Transactions (RPTs) with IndiGo”.
“We are not against RPTs as long as proper checks and balances exist and such Related-Party Transactions (RPTs) are in the best interest of the company,” he added. Countering the allegation, Bhatia said the IndiGo Board Chairman had pointed out in March that an EY report on the Related-Party Transactions (RPTs) of the past five years noted that there were no “substantive irregularities” but only “procedural irregularities”.
The shareholder agreement had expired on November 10, 2019.
A spokesperson for Bhatia’s InterGlobe Enterprise Group said the reason for Gangwal’s absence were not known to them. The results of the shareholders' votes at the Extraordinary General Meeting (EGM) are expected in the next two days.
Author – Satwik Sharma