BackWill be pushed to bankruptcy, if forced to pay Marans: SpiceJet in Delhi HC
The case has been adjourned to 10 December, with SpiceJet's managing director Ajay Singh asked to appear at the next hearing.
PremiumNew Delhi: Budget airline SpiceJet on Monday told the Delhi High Court that it risks insolvency if compelled to pay an additional ₹100 crore to former promoter Kalanithi Maran, and instead proposed an equity issuance to settle his dues. -
The court, while hearing the matter, expressed skepticism over SpiceJet's claims of insolvency, saying it is a common plea among debtors. It also noted that Maran cannot be forced to accept shares as a settlement.
The case has been adjourned to 10 December, with SpiceJet's managing director Ajay Singh asked to appear at the next hearing.
SpiceJet has been embroiled in a legal dispute over the enforcement of a 2018 arbitral award, which directed the airline to pay ₹579 crore plus interest to Maran and KAL Airways. The company has contested the award in the high court's division bench.
This is not the first time Singh has been summoned in this case. Previously, a single-judge bench of justice Yogesh Khanna had summoned Singh in this case. The matter has now been transferred to justice Manoj Kumar Ohri.
Maran claims that SpiceJet and Singh owe ₹440 crore in interest from the arbitral award, despite the airline's assertion that it has paid ₹100 crore following a court directive in August and owes only ₹194 crore more. SpiceJet has also indicated that it expects Maran to return ₹400 crore if the arbitration challenge succeeds.
Representing SpiceJet, senior lawyer Amit Sibal underscored the airline's financial distress, citing operational losses, a negative net worth, and obligations to employees that may tip it into insolvency. He urged the court to withhold judgment until the division bench rules on the arbitration dispute.
The court questioned the airline's contingency plan should the division bench uphold the arbitral award.
Sibal attributed SpiceJet's financial woes to several factors: the grounding of Boeing 737 Max aircraft, the impact of the pandemic, and fuel cost spikes due to the Ukraine conflict.
In a related development, SpiceJet on Friday had alleged before the division bench that Maran had violated a contractual obligation to settle a ₹100 crore loan from City Union Bank in 2012, which the airline repaid in June. The failure to settle the loan, according to SpiceJet, resulted in significant financial loss to the airline worth ₹29 crore.
The issue dates back 2015 when Maran and KAL Airways had offloaded their entire SpiceJet stake to Singh following a financial downturn. Singh, who paid a nominal sum of ₹2 for the stake, also assumed the airline's substantial debt worth ₹1,500 crore. In return, Maran paid ₹679 crore to SpiceJet for share warrants and preference shares, which the airline did not issue.
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