NEW DELHI: Amid intensifying spat between IndiGo promoters, a senior official said the Ministry of Corporate Affairs will only look at whether allegations of governance lapses are a management dispute or violation of companies law.
Rakesh Gangwal and Rahul Bhatia — promoters of the country’s largest airline IndiGo — are fighting over corporate governance matters, with Gangwal seeking intervention of markets regulator Sebi to address the issues.
The ministry, which is implementing the companies law, has sought information from InterGlobe Aviation — the parent of IndiGo — after Gangwal raised red flags in July.
“The only matter that the ministry will look at is whether any of the allegations hold water and if so, does it assume the shape of a management dispute or violation of companies law itself and impacts corporate governance,” Corporate Affairs Secretary Injeti Srinivas told PTI.
According to him, it is very necessary to plug deficiencies, if any, in the long term since the company is huge and one of the best-run airlines in the world.
“Its (IndiGo’s) value has to be preserved. In case, there is any such thing that violates the companies law, then company would be asked to rectify it but we have not reached anywhere there. The ministry has very limited role (in IndiGo matter),” he added.
Srinivas noted that the question is whether or not there are gross violations of companies law and compromising corporate governance which in the medium to long term can damage the company, its shareholders and other stakeholders.
In July, a senior official said the ministry would examine related party transactions as well as shareholder and other agreements.
In case violations are found, the ministry might invoke its powers under Section 6 of the Companies Act, 2013, the official had said.
Section 6 provides powers to override any memorandum, articles, agreements or resolutions passed at general meeting or by the board of directors in case they violate norms.
Gangwal had sent copies of his letter addressed to Sebi to Prime Minister Narendra Modi and Corporate Affairs Minister Nirmala Sitharaman, among others.
The allegations have been rejected by Bhatia group.
Ahead of InterGlobe Aviation’s annual general meeting on August 27, differences have intensified between the two promoters, with Gangwal opposing the proposal to expand the board strength to ten members from six.
He has also said there are “serious unresolved issues”.
While Gangwal has around 37% stake in InterGlobe Aviation, Bhatia and his InterGlobe Enterprises (IGE) Group have about 38%.