India's Supreme Court has ordered SpiceJet (SG, Delhi International) to pay out an INR2.7 billion rupee (USD32.6 million dollar) bank guarantee to a former majority shareholder of the airline in what may be the closing chapters of a seven-year-old legal dispute.
In 2015, Kalanithi Maran, a billionaire with extensive media interests, sold his 58.46% stake in the near-bankrupt SpiceJet for INR2 (USD0.024) to Ajay Singh, the current chairman and managing director of the airline. Singh also took over SpiceJet's liabilities of INR15 billion (USD181.4 million). The transaction included Maran providing equity of INR6.79 billion (USD82.1 million) in exchange for warrants and preference shares. In 2017, Maran initiated legal action, claiming neither the warrants nor preference shares were issued, nor was any money returned.
Following arbitration in 2018, the disputed amount was reduced to INR5.78 billion (USD69.9 million), plus interest. SpiceJet paid INR3.08 billion (USD37.2 million) of that, leaving INR2.7 billion outstanding. SpiceJet set aside the remaining amount, providing a bank guarantee to cover it, while the matter continued to be subject to further legal proceedings. This week, the court ordered the airline to pay the balance within two weeks.
"The remaining amount of INR2.7 billion is reserved with the company in cash, against which a bank guarantee has been given. This amount of INR2.7 billion will be comfortably discharged," said a statement issued by SpiceJet this week.
This week's hearing was an appeal relating to a 2020 order by India's High Court that SpiceJet provide another bank guarantee for INR2.43 billion (USD29.4 million) to cover interest claims. Maran's legal representatives told the Supreme Court this week that his interest claims now totalled INR3.62 billion (USD43.8 million). SpiceJet contests this, offering to pay interest at the rate of 6% per annum. This week, the Supreme Court also ordered SpiceJet to pay INR750 million (USD9.07 million) in interest within three months, while further legal proceedings will determine the final amount payable. SpiceJet's statement added that they were looking forward to the final settlement of the dispute.
