SpiceJet completes ₹100 crore payment to Kal Airways

New Delhi: Low-cost carrier SpiceJet on Tuesday said that it has completed the payment of ₹100 crore to former promoter Kalanithi Maran's KAL Airways as per the Delhi High Court's order regarding the execution of an arbitral award.

On Monday, SpiceJet had presented a cheque for ₹37.5 crore to Maran in court. However, Maran's counsel had declined it and requested SpiceJet to make a bank transfer. Later, in a statement, the troubled airline said it has made payment of of ₹77.5 crore and pledged to pay the remaining amount on Tuesday.

On 24 August, the Delhi high court had asked the airline to pay ₹100 crore to Maran by 10 September. 

SpiceJet told the court on Monday that it couldn't meet the payment deadline due to bank holidays on 9 September and 10 September. SpiceJet owes ₹397 crore to Maran.

Earlier, Maran's counsel had claimed that SpiceJet had forfeited its right to be heard in court by willfully disobeying orders and had requested the court to seize the entire profit of ₹204 crore from SpiceJet, along with future profits if the debt is not paid.

In response, SpiceJet argued that demanding immediate payment could push the airline into insolvency, which wouldn't benefit the Marans, as they would become operational creditors. SpiceJet also said that its financial difficulties arose from the various factors, including the purchase of Boeing 737 Max aircraft disallowed for flights by regulators, losses due to the COVID-19 pandemic, and increased fuel prices due to the Ukraine conflict.

The Delhi High Court, in its order on 31 July, had upheld the arbitration award and directed the low-cost carrier and its owner, Ajay Singh, to reimburse ₹579 crore plus interest to Kalanithi Maran, the airline’s former promoter. Maran had transferred his shareholding to Ajay Singh in 2015 when SpiceJet faced financial troubles.

Singh took over SpiceJet’s liabilities of ₹1,500 crore as part of the agreement, and Maran later approached the court, alleging non-issuance of convertible warrants and preference shares or return of the money. In 2018, an arbitration panel awarded Maran a refund of ₹579 crore plus interest, and in 2020, the high court ordered SpiceJet to deposit ₹243 crore as interest payment.

SpiceJet vs Credit Suisse

Meanwhile, SpiceJet and investment bank Credit Suisse have been engaged in a legal battle since 2015 over unpaid dues totaling approximately $24 million. This disagreement ultimately resulted in the Madras High Court issuing a directive to liquidate the airline in 2021.

The winding-up order was temporarily suspended by apex court which allowed both parties to settle the issue.

In a ruling on Monday, the Supreme Court ordered SpiceJet to pay $500,000 towards a Credit Suisse installment by September 22 and an additional $1 million for a defaulted amount. The apex court even warned the airline of ‘drastic action’ in case of failure to make the payment.