SpiceJet on Friday moved a division bench of the Delhi high court seeking damages from Sun Group chairman Kalanithi Maran, pleading breach of contract by the latter. The airline said that Maran had to arrange a ₹100 crore loan taken from City Union Bank in 2012 when the airline was under Maran’s control, but the payment was never made, resulting in losses.
SpiceJet repaid the loan in full in June this year.
It also sought to overturn a single bench order in July that upheld the validity of a 2018 arbitration award in favor of the Marans.
SpiceJet also informed the court that it is “struggling to stay in the air” and is facing financial losses.
In July, the Delhi High Court upheld an arbitration order of July 2018 awarding Maran and Kal Airways a refund of ₹579 crore plus interest.
According to SpiceJet, Maran’s failure to arrange the ₹100 crore loan incurred a loss of ₹23.77 crores, which escalated to ₹29 crores by the time the arbitral award was rendered.
Maran’s side argued that the case should be adjourned until the single bench decided on the enforcement of the arbitral award. The single bench is hearing the execution of the arbitral award and is yet to decide on the airline’s payment schedule to Maran.
Marans reiterated that current promoter Ajay Singh and SpiceJet are in debt ₹579 crores and only paid ₹100 crores after the order. In September, SpiceJet paid up ₹100 crore to Maran as per the order, instructing that the payment be made by September 10.
In earlier proceedings, Maran claimed that SpiceJet had forfeited its right to be heard in court by deliberately disobeying orders. They asked the court to seize all the profit from ₹204 crore that SpiceJet made during the first quarter of the current fiscal, 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 would not benefit the Marans, as they would become operational creditors.
SpiceJet also said its financial difficulties stemmed from a variety of factors, including the purchase of Boeing 737 Max aircraft, which was grounded from flying by regulators, losses due to the covid-19 pandemic, and increased fuel prices due to the Ukraine conflict.
The issue dates back to February 2015, when Marans and Kal Airways transferred their entire shareholding in SpiceJet to Ajay Singh, the airline’s current chairman and managing director, after the carrier nearly went under in 2014-15 due to severe cash crunch. . Singh, who paid ₹2 to take over the airline, also took over the liabilities of SpiceJet from ₹1,500 crores.
As part of the agreement, Marans also made payments of ₹679 crore to SpiceJet, under Singh, for issuing warrants and preference shares. SpiceJet, under Singh, never issues these warrants.
Maran then approached the Delhi high court in 2017, alleging that SpiceJet had not issued convertible warrants and preference shares or returned the money. In 2020, the Supreme Court ordered SpiceJet to depose ₹243 crore as interest payment, the airline did not comply with the order leading Marans to move the Supreme Court.
On February 13, the Supreme Court directed the immediate payment of the bank guarantee value of SpiceJet. ₹270 crore, which was to be paid to Maran and Kal Airways as part of the arbitration award. The apex court also ordered SpiceJet to pay up ₹75 crore to Maran and Kal Airways within three months as the interest. On 7 July, the SC denied any further extension to SpiceJet.
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Updated: 17 Nov 2023, 23:08 IST
(tagsTo Translate)SpiceJet