SpiceJet Completes ₹100 Crore Payment to Kalanithi Maran's KAL Airways

Low-cost carrier SpiceJet announced today that it has successfully completed the payment of ₹100 crore to former promoter Kalanithi Maran's KAL Airways in accordance with the Delhi High Court's directive related to the execution of an arbitral award. This development comes after a series of legal disputes and negotiations between the airline and Maran.

Initial Payment and Dispute Resolution

On Monday, SpiceJet had initially presented a cheque for ₹37.5 crore to Maran in court as part of the payment. However, Maran's legal counsel declined the cheque and requested SpiceJet to make a bank transfer. Subsequently, SpiceJet released a statement stating that it had made a payment of ₹77.5 crore and committed to remit the remaining amount on Tuesday.

The Delhi High Court had earlier, on August 24, 2023, instructed SpiceJet to make a payment of ₹100 crore to Maran by September 10, 2023. SpiceJet informed the court on Monday that it faced challenges meeting the payment deadline due to bank holidays on September 9 and September 10. It's important to note that SpiceJet's outstanding debt to Maran amounted to ₹397 crore. The case is scheduled to be heard again on October 3, 2023.

Legal Background and Maran's Claims

Previously, Maran's legal representatives had asserted that SpiceJet had forfeited its right to be heard in court by deliberately failing to comply with court orders. They had even requested the court to seize the entire profit of ₹204 crore from SpiceJet, along with any future profits if the debt remained unpaid.

In response, SpiceJet argued that demanding immediate payment could potentially push the airline into insolvency, a scenario that wouldn't be advantageous for the Marans since they would become operational creditors. SpiceJet further explained that its financial difficulties were the result of various factors, including losses due to the COVID-19 pandemic, the disallowed use of Boeing 737 Max aircraft for flights by regulators, and increased fuel prices due to the conflict in Ukraine.

It's worth noting that the Delhi High Court, in its order issued on July 31, 2023, upheld the arbitration award and directed SpiceJet, along with its owner Ajay Singh, to reimburse ₹579 crore plus interest to Kalanithi Maran. Maran had transferred his shareholding to Ajay Singh in 2015 during a period when SpiceJet was facing financial challenges. As part of the agreement, Singh assumed SpiceJet's liabilities amounting to ₹1,500 crore. 

However, Maran later approached the court, alleging non-issuance of convertible warrants and preference shares or return of the money. In 2018, an arbitration panel ruled in favor of Maran, awarding him a refund of ₹579 crore plus interest. In 2020, the high court issued a directive for SpiceJet to remit ₹243 crore as an interest payment.

Legal Dispute with Credit Suisse

Additionally, SpiceJet has been involved in a long-standing legal dispute with investment bank Credit Suisse since 2015 over unpaid dues totaling approximately $24 million. This disagreement led to the Madras High Court issuing a directive to liquidate the airline in 2021. However, the winding-up order was temporarily suspended by the apex court, allowing both parties an opportunity to resolve the matter.

In a recent ruling on Monday, the Supreme Court directed SpiceJet to make a payment of $500,000 towards a Credit Suisse installment by September 22 and an additional $1 million to cover a defaulted amount. The apex court also cautioned the airline about potential "drastic action" if the payment was not made as ordered.