We’ve a limited role in IndiGo spat, says MCA

‘Looking if it’s a management dispute or violation of companies law’

Amid an intensifying spat between the IndiGo promoters, a senior official said the Ministry of Corporate Affairs (MCA) would only look at whether the allegations of governance lapses were 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 Securities and Exchange Board of India (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 impact corporate governance,” Corporate Affairs Secretary Injeti Srinivas said.

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 was whether or not there were gross violations of companies law and compromising corporate governance, which, in the medium-to-long term, could 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 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 the 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 10 members from six now. He has also said there are “serious unresolved issues”.

While Gangwal has around 37 per cent stake in InterGlobe Aviation, Bhatia and his InterGlobe Enterprises (IGE) Group have about 38 per cent.