Rejects ex-promoter’s ₹1,323-cr. claim
An arbitration tribunal has ruled in favour of SpiceJet, in a share purchase dispute with former promoter Kalanithi Maran and rejected the latter’s ₹1,323-crore claim for loss on account of non-issuance of share warrants.
The tribunal has, however, held that Mr. Maran would be entitled to a refund of ₹308 crore, the subscription amount he made for warrants and preference shares, with an interest of 12% per annum for a period of 30 months. This will, however, not result in a new liability for SpiceJet as it has already deposited the amount in an escrow account with the Delhi High Court and will thus have no impact on the company’s balance sheet, said an airline official.
Mr. Maran had sold his 58.46% stake in SpiceJet to Ajay Singh, its current chairman, for a nominal ₹2 in 2015 after a financial crunch crippled its operations. The two sides had been locked in litigation since with Mr. Maran accusing SpiceJet of breach of agreement for not issuing him 189 million share warrants and preference shares despite his ₹6.79 billion infusion.
‘No BSE approval’
The warrants, if converted into equity, would have given Mr. Maran and his Kal Airways a 24% stake in the airline. SpiceJet contended these could not be issued as it did not get the BSE’s approval.
In its order, the tribunal, comprising three retired Supreme Court judges, upheld the airline’s plea. In the order, the retired judges said non-issuance of warrants cannot be treated as breach by SpiceJet and Mr. Singh.
‘Did not violate pact’
Mr. Maran had sought ₹1,323 crore towards loss due to non-issue of the share warrants. The tribunal did not accept this as it had decided that SpiceJet did not violate the agreement. It had also asked both sides to see if preference shares could be issued to Mr. Maran subject to him fulfilling certain terms of the agreement.
Mr. Maran would be entitled to refund of an additional ₹270 crore if the two parties were unable to explore the possibility of issuing cumulative redeemable preference shares (CRPS) in the next two months. The refund amount is lower as the tribunal allowed a counter claim of ₹100 crore by SpiceJet.
A source close to the airline termed the judgment ‘extremely positive.’ “Almost all our appeals have been granted. The panel has accepted that there was no deliberate violation on SpiceJet’s part to honour the commitments,” an official said.
The official pointed that the judgment now allowed the airline to raise new capital from the market as there was no dispute now on the shareholding. Additionally, the tribunal has allowed a counter claim of ₹29 crore in favour of SpiceJet.
Mr. Maran’s Sun Group and KAL Airways officials said they would contest the ruling of the arbitration panel that rejected their claim of damages and repossession of the control of the airline. Mr. Maran and KAL Airways are seeking legal opinion on moving the Delhi High Court in the matter to pursue the more substantive claim under Section 65 of the Contract Act seeking restitution so as to regain control of the airline.
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