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The rift between the promoters of IndiGo could snowball into a legal spat with strong disagreements emerging on the way forward for the airline.
According to experts familiar with corporate disputes, the case could end up at the National Company Law Tribunal (NCLT) if the dispute is about the shareholders’ agreement or related to corporate governance issues.
“The details of the dispute are not known but, in the past, disputes between two large shareholders have always reached the courts. Usually, disagreements are sorted out at the board level, but if the two promoters have engaged law firms to iron out their differences, then it must be serious. It happened in the Tata-Mistry case and also recently in the dispute between the Kirloskar brothers,” said a corporate lawyer.
Law firms hired
Rahul Bhatia and Rakesh Gangwal, along with other promoter entities, hold about 75 per cent in InterGlobe Aviation Ltd, which operates IndiGo. Bhatia held a 38 per cent stake in the company and Gangwal 37 per cent, as on March 31. While the former has hired JSA Law, the latter has picked Khaitan & Co to mediate.
IndiGo and the law firms did not respond to a query sent by BusinessLine .
Ronojoy Dutta, CEO, InterGlobe Aviation, in an email to employees, chose to downplay the rift. “I want to assure you that the growth strategy of the airline remains unchanged and firmly in place, and the management is fully charged by the board to implement it,” he said in the email.
Business as usual
BusinessLine spoke to a few employees of the airline, who said there was no visible impact on operations. “It’s business as usual for us. Hopefully, the promoters will sort out the issues without going to the court,” said a Mumbai-based executive on the condition of anonymity.
The dispute comes even as the aviation sector in general is going through a downswing. Low tariffs, high fuel costs and currency depreciation have hit the airline business. For the December quarter, IndiGo had reported a 75 per cent dip in its profit to ₹190 crore.
A source close to the company said the dispute could not have flared up at a worse time, considering the temporary shutdown of Jet Airways.
“The differences between the promoters were visible for a few months but everyone thought that since the two have been associated since 2006 onwards,, things would normalise. It would be a dampener if it got worse. The general view is that the two will be able to resolve the differences without eroding the company’s value,” the source said.
InterGlobe Aviation stocks fell 8.8 per cent on Thursday to close at ₹1,466 on the BSE.
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