Tue. Jun 18th, 2019

IndiGo promoters’ spat is different from other airline crises; every disagreement need not result in parting of ways

2 min read

An IndiGo Airlines aircraft arrives at a gate of the domestic airport in Mumbai February 22, 2012. It's not all doom and gloom for India's embattled airline sector. IndiGo, a low-fare carrier launched in 2006, has climbed to second place in market share at the expense of Air India and Kingfisher Airlines and is the only one of India's six main carriers making a profit, for now at least. Picture taken on February 22, 2012. REUTERS/Vivek Prakash (INDIA - Tags: TRANSPORT BUSINESS)

Indigo is acknowledged both by the cognoscenti as well as by the travelers as the best-run airline in the country though of late its turnaround time is also getting little sluggish causing delays in departures and arrivals. But that is something fliers have been taking in their strides just as they are only mildly bemused by the going tussle between Rahul Bhatia and Rakesh Gangwal the two feisty promoters of the low-cost airline. It is, however, equally true that IndiGo apart from being hit by the ‘delay’ malaise characterising most of the airlines is also plagued by the prospects of losses.

For the December quarter, IndiGo had reported a 75 percent dip in its profit to Rs 190 crore. It is this element that has caused consternation among its well-wishers over the spat at a time when they should be pulling up their socks and seeking to capitalize on the void left by Jet Airways.

Though there are reports of they going to National Company Law Tribunal (NCLT) for resolution of their differences, to those who are aware of company law and jurisprudence it appears their differences are not insurmountable. If anything, they are healthy differences of opinion between two shrewd businessmen who have entered into shareholders’ agreement for good measure.

Shareholders’ agreement is a private agreement between two sets of dominant shareholders—usually the foreign collaborator and the Indian promoter—outside of the articles of association. It is a secretive document they set store by in case of differences. The Supreme Court has made it clear that such agreement can be enforced by the two parties but not by making the company itself a party to it unless the terms of such agreement are made part of the articles of association. Be that as it may.

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