News

July 12, 2019

SEBI Summons IndiGo Airlines’ Company Secretary; Begins Probe As MCA Mulls Probe If Companies Act Was Violated


[ By Bobby Anthony ]

IndiGo

The Securities Exchange Board of India (SEBI) has summoned IndiGo airline’s company secretary Sanjay Gupta, who has been company secretary as well as chief compliance officer at IndiGo since August 2016. There are also indications that IndiGo Chief Executive Officer Ronojoy Dutta could be summoned by SEBI to ascertain whether he deliberately misled investors by downplaying the dispute as an administrative issue, after the dispute between the co-promoters first came to light.

In a related development, the Ministry of Corporate Affairs is also examining the possibility of investigating whether there has been any violation of the Companies Act.

Earlier, SEBI had sought response of Interglobe Aviation, which runs the IndiGo airline by July 19. It may be recalled that IndiGo airlines co-promoter Rakesh Gangwal had accused his partner Rahul Bhatia of multiple corporate governance violations like carrying out related-party transactions (RPT) without the approval of the audit committee and breaching the code of conduct for appointment of directors and senior management.

Gangwal had urged the SEBI to amend the Article of Association (AoA) with Bhatia in order to ensure that he gets equal rights in the management of the company.

Incidentally, the shareholders’ agreement between Gangwal and Bhatia, who hold 36.69% and 37.9%, respectively, expires in October.

Gangwal had also demanded investigations into violations of corporate governance regulations and laws by Bhatia and his-controlled firm Interglobe Enterprises (IGE) as well as an extraordinary general meeting to address his concerns.

Rahul Bhatia refuted Gangwal’s allegations and stated that these constitute a device to dilute and diminish controlling rights of his IGE group, adding that all RPTs were executed at an arm’s length basis. These transactions are in the areas of real estate, simulator training facility, general sales agents’ agreement and crew accommodations, which accounted for Rs 150 crore or merely 0.53% of the consolidated turnover of the company in FY19, Bhatia stated.

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