Pay Marans ₹100 cr by 10 Sep, Delhi HC tells SpiceJet

The court is set to deliver its final order on 11 September.

The single bench, led by Justice Yogesh Khanna court, in a verbal observation, also cautioned the airline about possible asset attachment in case the deadline is not met.

During the hearing, senior lawyer Maininder Singh, on behalf of Maran, stated that SpiceJet had lost its right to even be heard in court by not following the orders deliberately. Singh asked the court if Maran should be allowed to seize the entire profit of ₹204 crore from SpiceJet, along with future profits, if the owed amount is not paid.

In response, senior lawyer Amit Sibal from SpiceJet's side argued that demanding immediate payment could push the company into insolvency. He mentioned that if the company goes into insolvency, it will not benefit the Marans as they would become operational creditors.

Sibal attributed SpiceJet's weak financials to various reasons, including the purchase of Boeing 737 Max aircraft, disallowed by regulators for flight, as well as losses due to the covid-19 pandemic and increased fuel prices caused by the Ukraine war.

SpiceJet also informed the court that they are approaching the Supreme Court for relief and are in discussions for an out-of-court settlement.

On the same day, SpiceJet faced another setback from the division bench of the Delhi High Court, which rejected SpiceJet's challenge to the execution of an arbitral award. The division bench cited adherence to the Supreme Court's previous ruling while rejecting the plea.

SpiceJet, in a statement, said that the airline is working towards the resolution of the matter and make the payment within the timeframe.

“… in the enforcement petition filed by Kalanithi Maran and Kal Airways, the court in consultation and with the consent of SpiceJet directed the Company to pay ₹100 Crore by September 10, 2023. SpiceJet will honour the Delhi High Court’s order and make the specified payment within the prescribed time frame," the airline said in a statement.

During a prior hearing on August 9th, the court had directed SpiceJet to provide their financials via an affidavit in response to Maran's plea to seize 50% of the airline's revenue, which would contribute to the outstanding amount of over ₹390 crore.

Delhi High Court in its order on 31 July upheld the arbitration award and had asked low-cost carrier SpiceJet and its owner Ajay Singh to reimburse ₹579 crore plus interest to the airline's former promoter Kalanithi Maran.

In February 2015, Maran transferred his entire shareholding in SpiceJet to Ajay Singh, the current chairman and managing director of the airline, after the carrier nearly went belly up in 2014-15 due to a severe cash crunch.

Singh, who paid ₹2 to take over the airline, also took over SpiceJet’s liabilities amounting to ₹1,500 crore. 

As part of the agreement, Maran and Kal Airways also made payments of ₹679 crore to SpiceJet, under Singh, for issuing warrants and preference shares. However, Maran approached the Delhi high court in 2017, alleging SpiceJet had not issued convertible warrants and preference shares or returned the money.

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

In 2020, the high court ordered SpiceJet to deposit ₹243 crore as interest payment. On 13 February, the Supreme Court directed the immediate encashment of SpiceJet’s bank guarantee worth ₹270 crore, which was to be paid to Maran and Kal Airways as part of the arbitral award. 

The apex court also ordered SpiceJet to pay ₹75 crore to Maran and Kal Airways within three months as the interest. On 7 July, the SC denied any further extension to SpiceJet.

SpiceJet is also facing a legal challenge in the National Company Law Tribunal from several lessors on the issue of defaulted payment dues. Lessors like Wilmington Trust SP Services, Willis Lease Finance, Aircastle (Ireland), and Celestial Aviation are seeking the tribunal's intervention to initiate insolvency resolution proceedings against the airline.