IndiGo founders may finally settle dispute. All you need to know

The long-drawn-out fight between Rakesh Gangwal and Rahul Bhatia, the two founders of India’s largest airline IndiGo, may finally be coming to an end. 

An extraordinary general body meeting (EGM) of shareholders called by the company on December 30 likely signals that the two founders are finally calling a truce, according to The Economic Times.

What will the EGM seek to achieve?

Gangwal and Bhatia have been sparring since 2019 over several clauses in the company’s articles of association (AoA). 

The ET report says that the EGM will look to amend the AoA, which, among other things, say that if one promoter decides to sell his shares, the other has the right of first refusal to buy them. Also, its promoters need the approval of each other for any sale of shares to a third party.

But wasn’t such a proposal discussed by another EGM last year as well?

Yes, but the other shareholders of IndiGo’s parent, Interglobe Aviation, rejected the proposal. Citing an unnamed person aware of the latest development, the ET report said that this time, a truce could be reached between all concerned parties. 

When did the dispute first begin?

The dispute first emerged in July 2019 when Gangwal wrote to the Securities and Exchange Board of India, the finance ministry as well as the prime minister’s office, to intervene in the matter. 

Gangwal sought amendments to the AoA to remove rights of Bhatia’s IGE Group on the airline, and raised past related-party transactions, non-independence of the chairman, and refusal to hold an EGM on his request, among other issues.

In September of the same year, IndiGo said that the capital markets regulator SEBI had sought clarifications on the issue. The following month, Bhatia moved a London court for arbitration, which Gangwal rejected, forcing the former to reapply. 

In September this year, Interglobe said that the arbitration award had come. Now, an EGM has been called to discuss and resolve the issue. 

What will happen if the EGM approves the proposal?

If the EGM approves the proposal, it will mean that Gangwal can sell his shares without Bhatia's right of first refusal or nod.  But there is no clarity yet on if and when he may exit the company. 

How much of the company do Gangwal and his family own? 

Gangwal and family together own a 36.61% stake in the airline. Based on the airline's market capitalization end of day Thursday, his shares are worth Rs 27,782 crore.