Sun Group Firm on Non-Amicable Settlement with SpiceJet
In a recent update regarding the SpiceJet-Sun Group arbitration case, the Sun Group has firmly declined any possibility of reaching a mutually agreeable settlement with the opposing party.
The case revolves around a seven-year-old disagreement concerning the transfer of shares between Ajay Singh, the chairman and managing director of SpiceJet, and Kalanithi Maran and his company KAL Airways.
According to media reports citing a statement issued by the Sun Group on July 10, they expect SpiceJet to comply with the Supreme Court’s order and pay them an interest amount of Rs 386 crore.
SpiceJet
Last week, the Supreme Court issued a directive to SpiceJet, instructing them to pay the complete arbitral amount of Rs 380 crore to their former promoter, Kalanithi Maran. The apex court emphasized the need for conducting business with “commercial morality.”
Despite the arguments presented by senior advocate Mukul Rohatgi, representing SpiceJet, the Supreme Court declined to grant an extension of time, stating that the entire award is now enforceable.
“The battery of lawyers involved in this matter aims to simply delay compliance with the court’s orders. Personally, I do not approve of this approach,” stated the Chief Justice of India. “The court’s writ must be followed, and now, the Delhi High Court will enforce the awarded judgment.”
In June, the Delhi High Court instructed SpiceJet to pay Rs 380 crore to Maran and also ordered the airline to provide details of its assets within four weeks.
On February 13, the Supreme Court directed SpiceJet to pay Rs 75 crore within three months as interest dues, in response to Maran’s claim of Rs 362.49 crore, based on the 2018 arbitration award.
SpiceJet further stated that it has reserved the remaining amount of Rs 270 crore in cash, for which a bank guarantee has been provided, and it intends to fulfill this obligation in accordance with the Supreme Court’s directive. The airline also confirmed that it would pay the additional amount of Rs 75 crore within the specified three-month period, as instructed by the Supreme Court.
In February 2015, Maran and KAL Airways transferred their entire 58.46% stake in the airline to Singh. Subsequently, in 2017, Maran and KAL Airways filed a petition with the Delhi High Court, seeking the transfer of 180 million warrants, which were redeemable as equity shares, back to them.
Instruction from High Court
The High Court instructed SpiceJet and its promoter Ajay Singh to pay approximately Rs 243 crore as interest on the Rs 578 crore. The high court had previously ordered the airline to deposit this amount based on the 2018 arbitration award in the share-transfer dispute.
The high court allowed SpiceJet a period of six weeks to fulfill the payment, with the deadline set for October 14, 2020.
Following the expiration of the deadline, Maran and his company filed a petition with the high court to seize Singh’s entire shareholding in SpiceJet and assume management control due to the non-payment of Rs 243 crore.
Taking cognizance of SpiceJet’s appeal, the Supreme Court issued an interim order, suspending the high court’s directive.
Maran and Kal Airways approached the high court in relation to the share-transfer dispute, while SpiceJet demanded the transfer of 18 crore warrants that were redeemable as equity shares.
The high court directed SpiceJet and Singh to deposit Rs 578 crore in the registry of the court.
SpiceJet was allowed to provide a bank guarantee of Rs 329 crore and make a cash deposit for the remaining amount to the high court.
In July 2017, the Supreme Court dismissed SpiceJet’s appeal against the high court order.
On July 20, 2018, the arbitral tribunal rejected Maran’s claim for damages amounting to Rs 1,323 crore for the non-issuance of warrants to him and Kal Airways but awarded him a refund of Rs 578 crore along with interest.
Maran, the owner of Sun TV Network, took the case to the high court in opposition to the arbitration award.
The dispute arose from the failure to issue warrants to Maran following the transfer of ownership to Singh, who holds controlling shares in SpiceJet.
Sun TV Network
The conflict began when Singh regained control of SpiceJet in February 2015, during a period when the airline was facing financial difficulties.
In February 2015, Maran and Kal Airways sold their entire stake of 58.46%, equivalent to Rs 35.04 crore worth of equity shares in SpiceJet, to co-founder Singh for a mere Rs 2.
In response to Sun Group’s claim, the airline issued an official statement stating that the payment of Rs 380 crore, as directed by the Supreme Court in the case involving Mr. Kalanithi Maran and his firm KAL Airways, was solely a security deposit resulting from the execution proceedings.
“The final amount to be paid by either party will be determined by the Honorable High Court of Delhi in the ongoing proceedings under Section 34 of the Arbitration Act. The court has reserved its orders on 18th April 2023, and we are currently awaiting them,” stated the company.
SpiceJet also clarified that it had approached the Supreme Court in May 2023, seeking an extension to pay Rs. 75 crore. However, the matter was only listed for hearing on July 7. The company holds the proceedings and orders of the honorable courts in the highest regard.
The company emphasized its commitment to achieving an amicable settlement in this matter, considering the larger interest at stake.
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