IndiGo Row: MCA to see if the problems are a management dispute or a violation of company law
New Delhi, August 8 () In the midst of a growing dispute between IndiGo promoters, a senior official said the Ministry of Corporate Affairs will only analyze whether accusations of government failures are an administrative dispute or a violation of the law of companies.
Rakesh Gangwal and Rahul Bhatia, promoters of the country's largest airline, IndiGo, are fighting for corporate governance issues, and Gangwal seeks the intervention of Sebi market regulator to address the issues.
The ministry, which is implementing company law, has sought information from InterGlobe Aviation, the parent company of IndiGo, after Gangwal raised red flags in July.
The only issue that the ministry will analyze is whether any of the accusations is valid and, if so, assumes the form of an administrative dispute or a violation of corporate law and impacts corporate governance, said the Secretary of Corporate Affairs, Injeti Srinivas.
According to him, it is very necessary to cover the deficiencies, if any, in the long term, since the company is huge and one of the best managed airlines in the world.
Its value (of IndiGo) must be preserved. In case there is something that violates company law, the company would be asked to rectify it, but we have not got anywhere there. The ministry has a very limited role (in IndiGo subject), he added.
Srinivas said the question is whether or not there are serious violations of company law and compromise corporate governance that in the medium to long term can harm the company, its shareholders and other interested parties.
In July, a senior official said the ministry would examine transactions with related parties, as well as shareholder agreements and other agreements.
In case violations are found, the ministry could invoke its powers under Section 6 of the Company Law of 2013, the official said.
Section 6 provides powers to void any memorandum, articles, agreements or resolutions approved at the general meeting or by the board of directors in case they violate the rules.
Gangwal had sent copies of his letter to Sebi to Prime Minister Narendra Modi and Corporate Affairs Minister Nirmala Sitharaman, among others.
The accusations have been rejected by the Bhatia group.
Before the annual general meeting of InterGlobe Aviation on August 27, the differences have intensified between the two promoters, with Gangwal opposing the proposal to extend the strength of the board to six members out of six.
He has also said that there are serious unsolved problems. While Gangwal has a stake of around 37 percent in InterGlobe Aviation, Bhatia and its InterGlobe Enterprises Group (IGE) have about 38 percent. RAM RAM ANU ANU