InterGlobe Aviation Ltd has settled its case with the Securities Board of Exchange of India after the regulator company had begun an investigation against the airlines. SEBI had received many complaints about violation of corporate governance rules from its co-founder and director Rakesh Gangwal.
The parent company of India’s largest airlines IndiGo paid ₹2.10 crore to SEBI. The company settled the matter “without admitting or denying any violation on its part,” by paying a settlement fee of ₹2.1 crore, according to a SEBI order.
Reuters reported that SEBI discarded the proceedings against InterGlobe Aviation.
In July 2019, Gangwal requested to SEBI to intervene and address corporate governance issues. He highlighted concerns about certain unethical party related transactions and said that the shareholders’ agreement allows co-promoter Rahul Bhatia unusual controlling rights over IndiGo. Bhatia camp had rejected the allegations.
Following these complaints, SEBI inspected the issues and from its investigation, a show-cause notice was issued with respect to InterGlobe Aviation on 10th November 2020.
InterGlobe Aviation suggested settling the instant proceedings instigated against it, without admitting or denying the findings of fact and conclusions of law, through a settlement order. The settlement application was filed on 23 December 2020.
The company offered to a small sum over ₹2.1 crore “towards a full and final settlement of all regulatory, civil or criminal proceedings in relation to the facts contained in the SCN (Show Cause Notice) without admitting or denying any violation on its part,” the order said.
SEBI’s High Powered Advisory Committee (HPAC) advised the settlement proposal and the same was consented by the panel of Whole Time Members of Sebi on 25th January. This was then conveyed to the company on 5th February and it discharged the amount on 8th February, PTI mentioned.
Gangwal’s complaints were concerned with probable corporate governance lapses, including those relating to Related Party Transactions (RPTs) between the company and the IGE Group. It was also alleged that there was a misrepresentation in the company’s Red Herring Prospectus (RHP) recorded on 16th October 2015.
Gangwal and his associates hold 37% stake in InterGlobe Affiliation in comparison to Bhatia and his affiliates (IGE Group) who hold 38% of shares.