The Supreme Court on March 31 asked SpiceJet to consider paying the amount of Rs 300 crore sought by Kalanithi Maran as interest amount under an arbitration award for the dispute between the parties.
The top court’s suggestion for SpiceJet to consider paying out Maran’s ask came after the court was informed that the lumpsum payment of Rs 600 crore offered by SpiceJet was not acceptable to Maran, the former promoter of the airline.
While SpiceJet informed the court that the principal amount owed to Maran is secured, some part in cash and another part in bank guarantee, the airline’s counsel added that the dispute revolves around the rate interest.
A challenge to the arbitration award that asked SpiceJet to pay the interest amount remains pending. And an alternative offer proposed by SpiceJet envisioned a part payment of interest amount sought and an expeditious hearing of this pending challenge
Meanwhile, Maran’s counsel argued that the arbitration law states that the rate of interest to be levied ought to be 2% higher than what is offered by banks. The lawyer representing Maran also brought up the winding-up order passed against SpiceJet in a case involving Credit Suisse. “If the company is wound up, I will get nothing,” Senior Advocate Dushyant Dave said.
SpiceJet has settled the winding-up issue with Credit Suisse, Senior Advocate Mukul Rohatgi informed the court responding to the issue raised by Dave.
The Supreme Court, however, has posted the case for hearing on April 12 now while asking SpiceJet to consider paying interest amount to Maran.
“Consider paying the interest and wrap it up,” the bench said.
Maran, and his firm KAL Airways, had moved the top court earlier this year urging it to vacate the stay imposed on the Delhi High Court against the airline. The high court had asked SpiceJet to deposit Rs 243 crore towards interest payable to Maran in the share transfer dispute in line with the arbitration award. According to the arbitration award, SpiceJet owed Rs 579 crore to Maran as refund as well as interest on it.
Objecting to SpiceJet’s offer, Maran’s counsel told the court that the amount offered to be paid by SpiceJet is “my own money coming back to me”. It is the interest of Rs 300 crore over and above the principal amount that is the bone of contention.
With SpiceJet getting embroiled in a legal dispute with Credit Suisse leading to the Madras High Court ordering winding up of the company, Maran urged the Supreme Court to lift the stay on order directing SpiceJet to make payments to Maran. The decree will be rendered a “paper decree” if the company is wound up without discharging its dues towards him, Maran’s counsel had told the Supreme Court.
The dispute between Maran and SpiceJet:
The dispute dates back to 2015 when Maran and his firm KAL Airways transferred 58.46 percent of the shares held by them to the present Chairman of SpiceJet, Ajay Singh, for Rs 2. Singh, who was the co-founder of the airline, had taken on the airline’s liabilities valuing at Rs 1,500 crore.
Through this share transfer agreement, Maran was to be issued warrants and preference shares and had paid Rs 679 crore towards the same.
In 2017, Maran moved the Delhi High Court saying that he was neither issued the preference shares as agreed on nor was the money paid by him refunded. The high court referred the case for arbitration.
The arbitration tribunal, in July 2018, awarded refund to Maran to the tune of Rs 579 crore plus interest, but rejected his claim for Rs 1,323 crore in damages. When Maran challenged this arbitration award before the high court, the court favoured Maran and directed SpiceJet to deposit Rs 243 crore towards interest amount.This order of the high court was stayed by the Supreme Court shortly thereafter and came up before the top court earlier this year with Maran seeking vacation of the stay.