October 8, 2021 01:20 PM
IndiGo co-founder Rakesh Gangwal has moved Delhi High Court to enforce an arbitration order of the London Court of International Arbitration. Sources said the order had mandated relief in terms of the shareholders’ agreement, which gives greater control to co-promoter Rahul Bhatia and puts restrictions on transferring shares.
Based on the proceedings initiated by Bhatia-owned lnterGlobe Enterprises (IGE), the London Court of International Arbitration had on September 23 given the final award in the fight between the two IndiGo promoters. The proceedings were initiated by InterGlobe Enterprises (IGE) and Bhatia against Gangwal, the Chinkerpoo Family Trust, and Shobha Gangwal (RG Group).
On October 1, 2019, the IGE Group had submitted the request for arbitration to the London Court of International Arbitration. “The prayer is primarily in regard to the shareholders’ agreement. In order to change that an extraordinary general meeting (EGM) has to be called,” a person said.
Last year, the resolution, proposed by Rakesh Gangwal to amend the company’s Articles of Association, was defeated by the shareholders. A spokesperson for IndiGo and IGE refused to comment on the matter. Bhatia and Rakesh Gangwal didn’t respond to queries on the issue.
On September 24, in a regulatory filing, IndiGo said it had received the final arbitral award, dated September 23, issued in the arbitration proceedings, by which the company was named respondent.
The current shareholders’ agreement gives Bhatia’s firm IGE operational control of the firm and its management. Rakesh Gangwal has to comply with the shareholders’ agreement and the Articles of Association, and its voting during general meetings is to be dictated by IGE.
It also puts a restriction on either of the promoters on diluting their shareholding. A clause in the shareholders’ agreement says “if any member of either the RG Group or the IGE Group proposes to transfer its shares to a third-party purchaser (not being an affiliate) otherwise than on a stock exchange or by way of a pre-negotiated sale on a stock exchange, then the other group will have the right of first refusal and tag along right”.