The Delhi High Court has issued a ruling against low-fare airline SpiceJet, instructing it to pay ₹380 crores to its former promoter, Kalanithi Maran of the Sun Group. The court has also requested SpiceJet to submit an affidavit of its assets within four weeks. This ruling comes as a setback to the airline, which recently reported a significant increase in earnings for the December quarter. Additionally, SpiceJet is currently facing challenges from aircraft lessors regarding payment disputes.
Background of the Legal Battle
The recent High Court ruling, dated May 29, 2023, is a result of a longstanding legal dispute between the Maran family and SpiceJet's current promoter, Ajay Singh. The disagreement stems from alleged contractual obligations between Maran and SpiceJet. In 2017, Maran filed a lawsuit against the airline, claiming that SpiceJet had caused financial losses by failing to issue convertible warrants and preference shares to him and his company, KAL Airways.
Payment Settlement and Pending Interest
After an extended legal battle, SpiceJet eventually paid Maran a principal amount of ₹579.08 crore. However, the interest component remained pending. As of October 2020, the interest stood at ₹242 crore, which increased to ₹362 crore by February 2023, ultimately reaching ₹380 crore.
SpiceJet's Response and Settlement Discussions
A spokesman for SpiceJet was cited in a report by Mint stating that the airline is already engaged in discussions with Maran and KAL Airways to reach a comprehensive settlement. The company expresses confidence in resolving the matter through mutual agreement, highlighting that they have previously paid the entire principal amount awarded by an arbitral tribunal. On the other hand, the Sun Group, to which Maran belongs, has refrained from commenting on the court ruling.
Impact on SpiceJet's Financial Performance
Following the court's decision, SpiceJet's shares experienced a positive trend, trading at ₹26.85, reflecting a 3.95% increase. However, the financial implications of the ₹380 crore payment and ongoing legal battles could affect the airline's future performance.
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