Why did IndiGo’s Rahul Bhatia file a case in US?

Our Bureau New Delhi | Updated on October 18, 2019 Published on October 18, 2019

Rahul Bhatia, a co-promoter of IndiGo Airlines. File Photo   -  BusinessLine

It shows the hardening of stance against Rakesh Gangwal, say experts

Rahul Bhatia’s decision to start arbitration proceedings against Anupam Khanna in a court in Maryland seems to indicate a hardening of stand against Rakesh Gangwal, according to Amit Jajoo, Partner, IndusLaw.

Bhatia had filed the case in courts in the US earlier this week, according to news reports. Bhatia and Gangwal are the co-promoters of low-cost airline IndiGo who have been engaged in a public war of words for a while now. Khanna is an independent director on the airline’s board and is said to be close to Gangwal.

Gangwal had accused Bhatia of not following corporate governance norms, and of entering into related-party transactions. These and various other issues were addressed at the airline’s AGM earlier this year.

IndusLaw’s Jajoo thinks the issue before the US courts (Maryland) seems to revolve around Khanna, who, according to Bhatia and InterGlobe Enterprises (IGE ) group, has been acting in concert with Gangwal.

Communications retrieval

Corporate lawyers also feel that the proceedings in Maryland appear to have been started to retrieve communications between Khanna and Gangwal in support of the ongoing arbitration at the London Court of International Arbitration. The arbitration was initiated by Bhatia alleging breach of a shareholders’ agreement dated April 23, 2015, which was amended on September 17, 2015, and for causing wrongful losses.

The Maryland court has allowed the request for retrieval of documents by issuing a subpoena to Khanna to produce them, and also to allow the inspection of his premises.

Jajoo said the rationale behind filing the proceedings in the US court could lie in jurisdictional constraints. “As Khanna is a resident of Maryland, the courts of the UK where the arbitration proceedings are on-going do not have jurisdiction over issues such as issuing a subpoena,” he said.

Published on October 18, 2019
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