New Delhi: Rahul Bhatia, co-founder of Indian budget airline IndiGo, has filed an arbitration request against his partner Rakesh Gangwal in a London court, involving the judiciary for the first time in a feud between the two billionaire owners over allegations of corporate governance lapses.
Bhatia and his holding company filed the claim to the London Court of International Arbitration on Oct. 1, IndiGo’s operator InterGlobe Aviation Ltd. said in a stock exchange statement. It relates to Bhatia’s claims against Gangwal and his affiliates’ compliance with the shareholder agreement and articles of association, InterGlobe Aviation said.
No relief or monetary claim has been sought against the airline, which was named as a respondent in the filing. Gangwal didn’t immediately respond to a request for comment.
The dispute between the founders of Asia’s biggest budget carrier by market value has had little negative impact on its share price, which is near a record high. IndiGo is aggressively expanding, adding about one Airbus SE A320neo jet every week and flying to new international destinations. It is the biggest customer for Airbus’s best-selling narrow-body airplane.
Gangwal publicly accused Bhatia in July of corporate-governance transgressions, saying his “unusual controlling rights” allowed him to push through related-party transactions in violation of rules. IndiGo implemented a new policy for related-party transactions and expanded its board following the allegations, but Gangwal wasn’t convinced by the move, and has sought intervention from India’s securities regulator.
Gangwal, who was once chief executive of US Airways, and his affiliates own about 37% of IndiGo, while Bhatia’s company holds 38%. The two men formed IndiGo in 2005, and it quickly outpaced rivals to control almost half the Indian market, where airlines struggle to make money due to a cut-throat fare war.