Supreme Court Directs SpiceJet to Deposit Rs. 144.51 Crore; Imposes Cost for Prolonged Litigation
Supreme Court Directs SpiceJet to Deposit Rs. 144.51 Crore; Imposes Cost for Prolonged Litigation
The Supreme Court of India has refused to stay a Delhi High Court order directing SpiceJet and its promoter, Ajay Singh to deposit Rs. 144.51 crore. The court also imposed a cost of Rs. 1 lakh on the airline for prolonging the litigation, warning that the amount could be increased to Rs. 2 lakh if delays continue. The bench observed that there had been “tons and tons of litigation” in the matter. The court’s decision means SpiceJet must deposit Rs. 144.51 crore within six weeks, as earlier ordered.
The direction stems from proceedings before the Delhi High Court, which on 19 January recorded that the airline had admitted Rs. 194.51 crore was payable under earlier Supreme Court directions. After adjusting the Rs. 50 crore already paid, Rs. 144.51 crore remains due.
The Delhi High Court said that Supreme Court orders must be complied with and cannot be kept pending. It cited Article 144 of the Constitution, which requires all authorities to act in aid of the Supreme Court. The court also rejected SpiceJet’s argument that payment should await the final outcome of the arbitral award proceedings.
Background of the Case
In January 2015, when SpiceJet was in serious financial trouble, Kalanithi Maran and his company KAL Airways Pvt Ltd, sold their 58.46% stake in the airline to Ajay Singh.
As part of this deal, around Rs. 679 crore was supposed to be invested into SpiceJet through convertible warrants and preference shares. Later, Kalanithi Maran claimed that these shares and warrants were never properly issued to him, and he asked for his money back.
In July 2018, an arbitration tribunal ruled that SpiceJet must refund Rs. 579 crore plus interest to Maran. However, the tribunal rejected Maran’s larger claim of Rs. 1,323 crore in damages.
After this decision, both sides challenged parts of the ruling in court. Since then, they have filed several petitions and appeals, which has led to a long and ongoing legal dispute.
Impact on SpiceJet
The case is still costing SpiceJet a lot of money. The airline has already been struggling with not having enough cash, some of its planes being unable to fly, and legal complaints from lessors and creditors in recent years.