Indigo shareholders reject change to share transfer norm

In blow to Gangwal, resolution on right of first refusal on equity sale voted out

Turbulence on the ground: If the Articles are amended, Mr. Gangwal can sell his stake to competitors.

In the latest round of the ongoing duel between IndiGo co-founders, Rahul Bhatia and Rakesh Gangwal (RG), the former has emerged as the winner.

The airline’s shareholders on Wednesday voted overwhelmingly against a special resolution proposed by Mr. Gangwal which would deny his rival the right of first refusal in case of an equity sale.

In a BSE filing after the meeting, InterGlobe Aviation Ltd. (IGAL) informed the resolution was defeated as the votes cast against it were more than three times than those cast in favour.

Mr. Gangwal had sought deletion of clauses from the Articles of Association that provide the first right of refusal to the two co-promoters in case one of them seeks to transfer his share. According to experts on corporate law, the revision would have allowed Mr. Gangwal to sell his share in the company to either Rahul Bhatia’s competitor or anyone else without going to Mr. Bhatia first.

RG Group, comprising Mr. Gangwal, Shobha Gangwal and The Chinkerpoo Family Trust, collectively hold 37% shares in IGAL, while Mr. Bhatia’s company, InterGlobe Enterprises, owns a little more than 38%.

Unruly scenes at EGM

Earlier in the day, there were unruly scenes at the extra ordinary general meeting (EGM) as the investors expressed concerns over the possibility of the value of their shares diminishing.

The chairman of the board, M. Damodaran, had to pacify the shareholders saying there would be no impact on their shareholding. The investors were also miffed at Mr. Gangwal’s absence at the EGM, which he had called for. The spat between IndiGo’s two promoters became public last year when Mr. Gangwal wrote to markets regulator SEBI against his partner and the “unusual rights” to his group as well as alleged corporate misgovernance at IndiGo.

Mr. Gangwal had also spoken against decisions taken in violation of protocols, including in appointments to senior management positions. His objections were also about businesses carried out between IndiGo’s parent company and Mr. Bhatia’s InterGlobe Enterprises.