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On October 15, Bhatia and his IGE Group filed a petition in Maryland District Court against Khanna, accusing him of acting in concert with Gangwal, who Bhatia has legally accused of breaching the shareholders’ agreement on IndiGo.
A subsequent subpoena from the court sought to extract documents of Khanna’s correspondence with Gangwal.
Bhatia filed the case on the alleged breach of shareholders’ agreement in the Indian branch of the London Court of International Arbitration (LCIA) on October 1. Khanna’s attorneys said that the law invoked in the case filed against him provides “no authority for the subpoenas,” as it is a “private arbitration” and not a “foreign tribunal.” Khanna’s attorneys also said he is a citizen of India and nonparty to the Indian arbitration in LCIA. They said he is currently in Maryland but will return to India shortly.
“Petitioners are effectively placing the cart before the horse as they initiate premature discovery in a foreign jurisdiction, the State of Maryland, for use in a private arbitration that was initiated in India barely one month ago,” Khanna’s attorneys said.
The “documentary and testimonial evidence” that the subpoenas seek to extract from Khanna specifically refers to his correspondence with Gangwal since July 2018. According to the petition filed by Bhatia and his IGE Group, July 2018 is when Gangwal first demanded that Bhatia and his IGE Group’s controlling rights in the airline be diluted, a contention which along with others, snowballed into a very public feud between the two partners who set up and developed India’s biggest airline by passengers.
Khanna is accused of “acting in concert” with Gangwal on the basis of his emails that Gangwal himself uploaded on a website called Governanceindia. com, which he set up to give public updates of the ongoing differences with Bhatia. For example, emails sent by Khanna to IndiGo chairman M Damodaran in August 2019 supported Gangwal’s contention on the board structure being skewed towards the Bhatia camp. The email also had Khanna’s concerns on related party transactions — IndiGo’s deals with other companies affiliated to IGE such as hotels — which Gangwal had raised.
Gangwal has since last year flagged and alleged several issues in the company including the misuse of controlling rights by Bhatia, who has the right to appoint the chairman, majority of the directors and key management personnel; irregularly signed related party contracts and the absence of a woman director on the board of the company.
Earlier this year, Gangwal wrote to the Indian capital markets regulator Securities Exchange Board of India (Sebi) as well as the prime minister’s and finance minister’s offices, flagging the issues. This was followed by lengthy board meetings and an apparent resolution between the two partners, which entailed a restructuring of the board by including more independent members.
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