The Delhi high court on Friday refused to allow a plea moved by IndiGo co-promoter Rakesh Gangwal seeking to enforce an arbitration award that was awarded by the London Court of International Arbitration. The court said that the directions sought by Gangwal are tantamount to enforcement, and can’t be allowed at this stage. The court asked Gangwal to make the payment of damages of $25,000.
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Meanwhile, the counsel of InterGlobe Enterprises Private Ltd’s (IGE’s) co-promoter Rahul Bhatia said that Indigo will challenge the arbitral award.
Harish Salve, appearing for Gangwal, said, "I have an enforceable award. Award asks for both sides should jointly take action to remove restrictions under Articles of Association."
"Seeking to requisition for an EGM, we are inviting draft resolutions. We have to agree to the term of the resolutions that have to be passed. If they do not challenge this verdict, at least this process can be finished. There is no tearing hurry, let us begin this exercise."
Senior advocate Abhishek Manu Singhvi, appearing for Bhatia, said "Rakesh Gangwal is seeking to enforce the award in this fashion. He is trying to pay the damages of merely $25,000, we’ll accept it. We have 90 days to consider legal options, we may consider a challenge."
"Indigo was not a party to the dispute but is facing consequences of the arbitral award. Award can’t be enforced in this fashion."
Gangwal on Thursday moved the court to enforce the arbitration award. Earlier on September 23, the London Court of International Arbitration gave the final award in the proceedings initiated by Bhatia against Gangwal. Both parties were granted 90 days’ time to enforce the order.
In a filing on the Bombay Stock Exchange (BSE) on September 24, IndiGo had said that no directions have been given to the company. However, directions were issued to both RG Group and the IGE Group, IndiGo’s parent company, in relation to the relief sought by them against each other.
IndiGo said that the award also directs the reimbursement of the costs incurred by the company in relation to the arbitration by the IGE Group.
However, Gangwal moved the high court before the deadline and also agreed to enforce the orders before the 90-day period.
According to IndiGo’s BSE filing last month, the IGE group had sent a request for arbitration on October 1, 2019, to the London Court of International Arbitration, India, under a shareholders’ agreement dated April 23, 2015 (amended on September 17, 2015). The IGE group had sought certain reliefs against the RG group, including compliance with shareholders agreement, the company’s articles of association (articles) and damages.
As of June 2021, Gangwal Group held 36.63 percent share and Bhatia's lnterGlobe Enterprises Private Ltd holds a 38.2 percent stake in IndiGo.
The legal tussle between Bhatia and Gangwal, the two promoters of IndiGo, began on July 8, 2019, when Gangwal wrote to the Securities and Exchange Board of India (SEBI), the Prime Minister’s Office, and to the Finance Ministry seeking intervention in several corporate governance issues and Bhatia Group’s control on the airline.
Gangwal had asked for an amendment in the Article of Association of the company to remove the rights of IGE Group on the airline. He had also raised issues regarding third-party transactions, non-independence of the present chairman, and refusal to hold extraordinary general meetings (EGM).
In response, the IGE group had said that there is absolutely no evidence regarding the questionable third-party transactions between IGE and the airline.
Gangwal was re-appointed as a director of IndiGo on August 31, 2021. Though nearly one-third of public institutional investors rejected the re-appointment, the resolution was passed as promoters, non-institutional investors and other institutional investors voted in favour.