SpiceJet says KAL Airways, Kalanithi Maran damage claim untenable

In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent stake in SpiceJet to Singh. A co-founder of SpiceJet, Singh took on the airline’s liabilities of around Rs 1,500 crore.

SpiceJet has dismissed as untenable KAL Airways and Kalanithi Maran’s demand for Rs 1,323 crore in damages in their dispute with the low-cost airline.

"..these assertions are not only legally untenable but also a regurgitation of previously rejected claims by the arbitral tribunal and then the Delhi High Court," SpiceJet said in a statement on May 28.

A day earlier, KAL Airways and Maran said they would seek more than Rs 1,323 crore in damages from SpiceJet and its chief, Ajay Singh, and also challenge the recent Delhi High Court in the Supreme Court.

A division bench of the high court has set aside a single judge order that had upheld an arbitral award asking SpiceJet and Singh to refund Rs 579 crore and interest to Maran.

The airline said KAL Airways and Maran initially sought damages of more than Rs 1,300 crore during the arbitration proceedings. The claim was rejected by a panel of three retired Supreme Court judges.

SpiceJet has also said it will seek a refund of Rs 450 crore of the total Rs 730 crore paid to the airline’s former promoter Maran and KAL Airways.

The Dispute

In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent stake in SpiceJet to Singh. Singh also took on the airline’s liabilities of around Rs 1,500 crore.

As part of the agreement, Maran and KAL Airways said they paid SpiceJet Rs 679 crore for issuing warrants and preference shares. However, Maran alleged that the warrants and preference shares were not allotted and initiated arbitration proceedings against SpiceJet and Singh.

In July 2018, an arbitration panel rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore plus interest.

On May 28 morning SpiceJet was trading at Rs 57.64 on the National Stock Exchange, down 1.08 percent.