The Supreme Court on February 10 asked Kalanithi Maran, the former promoter of SpiceJet, to consider a settlement offer proposed by the airline to end its long-drawn share-transfer dispute between the two sides.
"SpiceJet has offered to pay Rs.600 crore in cash in the share transfer case with its former promoter Kalanithi Maran and his firm KAL Airways for a full and final settlement of all disputes," the airline said in a statement issued post-hearing before the top court. "The offer was made during the hearing in the Supreme Court today. "
The media baron and his firm, KAL Airways, were before the Supreme Court urging it to lift the stay on a Delhi High Court order asking the low-cost airline to deposit Rs 243 crore as interest on the amount of Rs 579 crore in the dispute. The high court order is under a stay since November 2020.
With the airline facing a possible wind-up, Maran sought for the stay to be lifted to secure the decreed amount, that is the refund amount awarded and interest, from SpiceJet.
Counsel for the cash-strapped airline informed the court that the principal amount, that is the refund amount, owed stands at Rs 579 crore. Of this, Rs 308 crore has been paid in cash and Rs 270 crore secured under bank guarantee. The airline is willing to convert the bank guarantee to cash and pay out an additional Rs 22 crore to Maran.
“Rs 600 crore can go to him (Maran) and the case can be settled provided that he does not file any more execution petitions,” Senior Advocate Mukul Rohatgi told the court. So far, three execution petitions have been filed by Maran against the airline, Rohatgi added.
If this proposal is not agreeable to the airline’s former promoter, then a reduced amount secured under bank guarantee can be disbursed to Maran while the hearing on the pending litigation between the parties may be fast-tracked, the counsel proposed.
The point of contention between the parties remains to be the interest payout.
“Ask him (Maran) to give up the interest and I (SpiceJet) am willing to pay the amount and close the case,” Rohatgi submitted before the Supreme Court. “He wants 18 percent interest which is unjustified.”
Senior Counsel Maninder Singh, representing Maran, told the apex court that the principal amount of Rs 579 crore was a figure arrived at in 2018. The interest amount of Rs 243 crore, which the high court directed SpiceJet to deposit, is an admitted figure.
With a winding-up order passed against SpiceJet by the Madras High Court, the order in favour of Maran will be rendered a “paper decree” alone if the company is wound up before Maran is paid the amount he is entitled to, Singh argued.
While a Supreme Court bench orally observed that the airline’s “antecedents are not very good”, counsel for SpiceJet hinted that the dispute with Credit Suisse, which led to the winding up order, may be settled soon.
The Supreme Court asked the legal counsel for Maran to relay SpiceJet’s offer to his client and consider the same. The court will hear the case again next week, it said.
The share-transfer dispute
The case centres around a bitter share transfer dispute between the two sides.
In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent in SpiceJet, to Singh, the current Chairman and Managing Director, for Rs 2 after the airline’s operations were upended by a severe cash shortage. Singh, a co-founder of SpiceJet, 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. Maran launched litigation in the Delhi High Court in 2017 against Singh and SpiceJet after he said that neither the convertible warrants and preference shares were issued nor was the money returned.
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. SpiceJet was permitted to furnish a bank guarantee for Rs 329 crore and make a cash deposit for the remaining sum of Rs 250 crore.Soon after Maran contested the ruling of the arbitration panel that had not only rejected his claim of damages but also regaining control of the airline. The Delhi High Court, in September, ruled in favour of Maran.