IndiGo Airlines (6E, Delhi International) co-founder and 37% shareholder Rakesh Gangwal has sent a letter to the Securities and Exchange Board of India (SEBI) asking the regulator to probe alleged corporate governance shortcomings at the LCC.

"Beyond just questionable related party transactions, various fundamental governance norms and laws are not being adhered to and this is inevitably going to lead to unfortunate outcomes, unless effective measures are taken today," Gangwal said in a letter, which was made public by IndiGo in a stock market filing.

The airline's co-founder alleges that IGE Group, a vehicle for fellow co-founder Rahul Bhatia which owns a 38% stake, enjoys "unusual controlling rights over IndiGo", having the rights to appoint three out of six directors, the Chairman, the Managing Director, the CEO, and the President of the airline.

"These unusual controlling rights seem to be the basis for the various violations of law and governance at IndiGo... [They] give IGE Group, a minority shareholder, significant influence over the decisions of IndiGo and there is nothing wrong in that by itself, provided such influence is used judiciously and with prudence and is in the best interest of the Company... I request SEBI to look into and, if thought fit, ask the Company to make necessary changes to the unusual controlling rights available to the IGE Group," Gangwal said.

He added that with a market share on domestic routes exceeding 50%, IndiGo Airlines has become a "critical national asset" and as such, should be subject to the most stringent corporate governance oversight. Gangwal alleged that the attempts to raise the issues internally have been blocked by the IGE Group, which only paid lip service to the corporate governance norms while continuing to skirt them.

Gangwal also appealed to SEBI not to dismiss the accusations as "procedural irregularities".

In a stock market filing, IndiGo acknowledged receiving the letter but did not respond to its content. The LCC said that SEBI had given it until July 19, 2019, to respond to the allegations and it intended to do so.

Following the news about the spat, IndiGo lost almost 15% on the Indian National Stock Exchange.

On top of Gangwal's and Bhatia's stakes, the remaining 25% stake in IndiGo is publicly traded.