SpiceJet (SG, Delhi International) has ignored a Supreme Court order to pay the airline's former majority owner INR750 million rupees (USD9.1 million), earning the bench's wrath last week and further enmeshing the embattled carrier in legal problems.
Kalanithi Maran, a billionaire media mogul, owned a 58.46% stake in the near-bankrupt SpiceJet until he sold out to the current majority owner, Ajay Singh, in 2015 for INR2 (USD0.024). The transaction also included a substantial capital injection from Maran in exchange for stock warrants and convertible redeemable preference shares. While SpiceJet received the capital, Maran never received the warrants and shares. He subsequently commenced legal action, seeking INR13.23 billion (USD160.1 million) in restitution and damages.
In 2018, an arbitration tribunal in New Delhi reduced that amount but ordered SpiceJet to pay Maran INR5.78 billion (USD70 million), which includes INR3.08 billion (USD37.3 million) Maran paid the airline towards the never issued shares plus interest. SpiceJet eventually paid the INR3.08 billion and provided a bank guarantee to cover the remaining amount due, INR2.7 billion (USD32.7 million).
In 2020, India's High Court ordered SpiceJet to provide another bank guarantee to cover INR2.43 billion (USD29.4 million) in interest claims. The current court dispute revolves around that, with SpiceJet having a verified history of ignoring or disputing interest payment orders. Maran claims interest on the original debt stood at INR3.62 billion (USD44 million) in February 2023, when India's Supreme Court ordered SpiceJet to pay a INR750 million instalment on the interest payments within 90 days.
In late May, Maran had SpiceJet back in court over the non-payment of the INR750 million within the deadline period, referring the matter to the Delhi High Court. By now, the claimed interest debt had grown to INR3.8 billion (USD46 million). As reported in ch-aviation, Justice Yogesh Khanna said given that SpiceJet had ignored the February ruling, he had no alternative but to order payment of the full INR3.8 billion claimed and gave the airline four weeks to file an affidavit detailing its assets.
Last week, SpiceJet asked the Supreme Court for additional time to make the February payment order. The court declined the application. Mukul Rohatgi, representing SpiceJet, told the court the airline could make a good faith payment of INR100 million (USD1.2 million) immediately. Maninder Singh, for Maran, argued that the court should not grant SpiceJet any time extensions. Chief Justice of India D.Y. Chandrachud and Justice P.S. Narasimha agreed, calling SpiceJet's application "luxury litigation," saying that "if orders are not complied with, consequences must follow." The two justices called the application "nothing but a delay tactic of Spicejet Ltd to not pay money even when there are court orders directing the same."
Rohatgi admitted to the court that SpiceJet was facing financial difficulties. According to ch-aviation fleets data, 32 of its 63 aircraft are inactive, and the airline has accrued a reputation for unreliability and cancellations. SpiceJet is also facing significant litigation, with several lessors attempting to repossess aircraft and have the airline declared insolvent. However, SpiceJet maintains that it continues to work towards reactivating its fleet and expanding its network. It says it is working with creditors on a case-by-case basis, adding that it hopes to amicably resolve each dispute.
Malan, in a sharply word statement issued via his company, KAL Airways Private Ltd, on July 10, said no such talks with him or any associated entity were underway. "We deny the same, and there is no question of an amicable settlement with SpiceJet Ltd in view of the matter having reached finality by virtue of the order dated July 7, 2023, of the honorable Supreme Court of India."
