The dispute over corporate governance between Rakesh Gangwal and Rahul Bhatia, the two co-founders of IndiGo Airlines, has become more bitter.

In a media statement, InterGlobe Enterprise (IGE) said that though Gangwal, while airing his grievances, talked about the rights of the IGE Group as a shareholder and promoter, he failed to cite a single instance where there has been any kind of misuse or abuse of such rights.

The exchange of allegations and counter-allegations between the two came out in the open when Gangwal wrote to the Securities and Exchange Board of India (SEBI) on Tuesday, asking it look into violations of corporate governance rules and questionable related party transactions (RPTs).

Copies of the letter were also sent to Prime Minister Narendra Modi, apart from the Ministers for Finance, Corporate Affairs and Civil Aviation.

Bhatia, too, wrote to SEBI countering Gangwal’s allegations. SEBI has given both parties time till July 19 to respond on the matter.

‘No abuse of rights’

IGE said in its media statement on Friday: “Has there been any stripping of assets or profits? Has there been any misfeasance or fraud? While he emits volumes of hot air about RPTs, he ends up giving one example of what he believes demonstrates that there may have been something which did not meet the arm’s length criteria – and that example is factually wrong.”

The statement added that while Gangwal cites some instances which lead him to believe that the corporate governance at IndiGo has gone to the dogs, “from the specific instances cited by him about lack of corporate governance, not one concerns IGE or any of its rights,”

It also said that Gangwal remarked that the company’s board did not convene the EGM requisitioned by him.

“Legal opinion had been sought by IndiGo, and basis that opinion, the board declined to convene the EGM. This was not any abuse of the rights that IGE Group may have,” the statement said.

The statement added that as a continuing response to Gangwal’s “baseless and fact-free insidious allegations” on corporate governance, InterGlobe Aviation Ltd (IGAL) and InterGlobe Enterprises — one of IGAL’s promoters — will continue to place facts “rather than smoke and mirrors” in the public domain.

Significant control

Calls made to Gangwal by BusinessLine remained unanswered. He, however, told CNBC TV18 that he is not looking to gain control of InterGlobe Aviation.

“But I believe that it is important that no one group or individual or promoter should have such significant control over a critical infrastructure, (such) as the airline,” he said.

Gangwal said for a company of the size and relevance of IndiGo, the ratio of independent directors on the board should be more than one-third (of the total strength). “The airline should not be run as a personal fiefdom,” he said.

Bhatia and his group companies control about 38 per cent of InterGlobe, while Gangwal and affiliates own around 37 per cent.

A little above 25 per cent is held by public shareholders, including global investors and funds.

“Indian corporate history is littered with carcasses of companies roiled by bad governance,” Gangwal said, referring to failed airlines such as Kingfisher and Jet Airways, as well as other large companies.