SpiceJet Demands ₹450 Crore Refund from Ex-Promoter Kalanithi Maran After Court Reversal
Budget airline SpiceJet announced on Wednesday that it will ask for a refund of ₹450 crore from its former promoter, Kalanithi Maran, and his company, KAL Airways. This decision follows a Delhi High Court order on May 17, which overturned an earlier judgment that had favored Maran.
SpiceJet stated that it will seek the return of ₹450 crore out of the ₹730 crore it had paid to KAL Airways and Maran. This sum includes ₹580 crore as the principal amount and ₹150 crore as interest.
The airline noted that the Division Bench of the Delhi High Court ruled in favor of SpiceJet and its current promoter, Ajay Singh, in the long-standing share transfer case against Maran and KAL Airways. This ruling overturns a previous decision by a single-judge bench, which had supported the arbitral award in favor of Maran.
Relief for SpiceJet
The order was passed by Justices Yashwant Varma and Ravinder Dudeja, responding to a plea by SpiceJet’s chairman and managing director, Ajay Singh, and the airline. They had challenged a single-judge order from July 2023 that had upheld the arbitral award.
SpiceJet and Ajay Singh argued against several parts of the award, including the requirement to refund ₹270 crore to KAL Airways and Maran, and the imposition of 12% interest on warrants and 18% interest on the awarded amount. They claimed these directives were unfair and sought their cancellation.
The division bench found that the single judge had not properly considered claims of serious illegality and breaches by KAL Airways and Maran. The court also noted that penal interest was charged even though SpiceJet had not violated the share purchase agreement. As these issues were not adequately addressed by the single judge, the appeals by Ajay Singh and SpiceJet were allowed.
Though the high court did not halt the arbitral award, it allowed the appeal to be reconsidered under Section 34 of the Arbitration and Reconciliation Act 1996. This means the previous decision has been nullified, and the case will be reviewed again by the single bench, considering all aspects of the dispute.
The conflict dates back to February 2015 when Maran transferred his entire shareholding in SpiceJet to Ajay Singh, the current chairman and managing director, after the airline faced a severe cash crisis in 2014-15. Singh, who paid ₹2 to take over the airline, also assumed its liabilities of ₹1,500 crore.
As part of the agreement, Maran and KAL Airways paid ₹679 crore to SpiceJet, under Singh, for issuing warrants and preference shares. However, in 2017, Maran approached the Delhi High Court, claiming that SpiceJet had neither issued the convertible warrants and preference shares nor returned the money.
In July 2018, an arbitration panel rejected Maran’s claim for ₹1,323 crore in damages for not issuing warrants but awarded him a refund of ₹579 crore plus interest. In 2020, the high court ordered SpiceJet to deposit ₹243 crore as interest payment.
On February 13, 2023, the Supreme Court directed the immediate encashment of SpiceJet’s bank guarantee worth ₹270 crore, to be paid to Maran and KAL Airways as part of the arbitral award. The court also ordered SpiceJet to pay ₹75 crore to Maran and KAL Airways within three months as interest.
On July 7, 2023, the Supreme Court denied any further extension to SpiceJet and directed the airline to pay the entire arbitral amount of ₹380 crore to former promoter Maran.
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