The Supreme Court on July 7 refused to grant additional time to low- cost airline SpiceJet to make payments to Kalanithi Maran to comply with its order from February.
The court pulled up SpiceJet for filing the application and noted that SpiceJet was pursuing a luxury litigation and said it will not grant any extension to SpiceJet as commercial morale must be upheld.
As a consequence of this order, SpiceJet will have to pay over Rs. 350 crore to Maran.
During the hearing today, SpiceJet represented by senior advocate Mukul Rohatgi requested the court to grant them an extension and told the court that they were ready to pay Rs. 10 crore immediately to show their bonafides.
Appearing for Maran, senior advocate Maninder Singh argued that SpiceJet has not paid them any amount pursuant to the SC's February order and urged the court not to grant them any extension.
The court thus refused to grant any extension to SpiceJet.
In February 2023, SC disposed of the case directing that SpiceJet’s Rs 270-crore bank guarantee be encashed and asking the airline to pay Rs 75 crore towards interest within three months.
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However, in May, Maran moved Delhi High Court stating that SpiceJet has not complied with the order of the Supreme Court. The Delhi High thus directed SpiceJet to pay the entire amount of interest of Rs. 380 crore to Maran as they had not complied with the SC’s order, despite SpiceJet saying they had moved a petition seeking an extension of the three-month period.
The present order of Supreme Court is the reiteration of its earlier order passed in February 2023. The main petition challenging the award by both the parties are pending disposal by the Delhi High Court.
The matter relates to payment of interest on a principal amount of Rs 579 crore that has already been paid. SpiceJet is engaged in talks with Kalanithi Maran and his firm KAL Airways and remains committed to finding an amicable settlement. We remain confident of resolving this to the satisfaction of both sides through discussions, a SpiceJet spokesperson said.
Background:
In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent in SpiceJet to Ajay Singh, the current Chairman and Managing Director (CMD). 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. However, Maran alleged that the warrants and preference shares were not allotted and initiated arbitration proceedings against SpiceJet and Ajay Singh.
Also Read: SpiceJet clears Rs 100-crore City Union Bank debt, stock gains
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 of the remaining sum of Rs 250 crore.
Maran moved the Delhi HC to enforce the arbitral award. The HC, in September 2020, ruled in favour of Maran and directed SpiceJet to deposit Rs 243 crore. However, the apex court stayed the order in November 2020.
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