The Supreme Court on Friday rejected SpiceJet’s appeal and directed the company to pay a sum of Rs579 crore over a share transfer dispute arising out of a change in the airline’s ownership in 2015.
Arbitration proceedings between the parties are underway and are likely to be wrapped up within six months.
A bench headed by justice Rohinton F. Nariman upheld the 3 July order of the Delhi high court directing deposit of Rs250 crore in a cash deposit on or before 31 August and the balance of Rs329 crore by way of a bank guarantee with the court towards the disputed amount.
“It was virtually a consent order passed by the Delhi high court. I am without a penny from the last two years. They have shown the amount as payable under their balance sheet," Abhishek Manu Singhvi, counsel for Kalanithi Maran and KAL Airways, told the apex court.
The money, which is to be deposited in the court registry, serves as a security and will be put to use at a later date, subject to the outcome of ongoing arbitration proceedings between the two parties.
On 3 July, a division bench headed by justice Ravindra Bhat had directed SpiceJet to deposit the disputed amount of Rs579 crore by bifurcating it into a cash deposit of Rs250 crore and a bank guarantee of Rs379 crore.
The court had considered the bifurcation essential considering the unpredictable nature of injury that may be caused to the commercial operation of the airline if the entire amount was secured through a cash deposit.
The case relates to a dispute arising out of non-issuance of warrants in favour of KAL Airways’s non-executive chairperson Kalanithi Maran, after transfer of ownership to Ajay Singh, the current controlling shareholder of SpiceJet.
On 29 July, justice Manmohan Singh had directed SpiceJet to deposit Rs579 crore in five equal monthly instalments with the court registry. The court also asked KAL Airways and SpiceJet to set up an arbitral tribunal to resolve the issue. SpiceJet had appealed against this order.
One of the main issues that SpiceJet has raised for appealing the order, the airline’s lawyer C.A. Sundaram had told the court, was that the July ruling amounted to an interim order under the Arbitration Act, even when there was no pending arbitration between the two parties.
Maran and KAL Airways had transferred their entire 58.46% stake in SpiceJet, amounting to 350.4 million shares, to its co-founder Ajay Singh in February 2015, leading to a change in ownership of the airline.
Under the share purchase agreement, KAL Airways and Maran were to receive redeemable warrants in return for the Rs690 crore they spent on SpiceJet towards operating costs and debt payments.