HC asks SpiceJet to deposit Rs 243 cr in share transfer row with K Maran

The Delhi High Court on Monday asked cash-strapped airline SpiceJet to deposit within six weeks an additional Rs 243 crore in connection with a share-transfer dispute with ex-promoter Kalanithi Maran, owner of Sun group.

Maran has the right to seek status quo on SpiceJet’s shareholding if the amount is not deposited within the deadline, meaning the company won’t be able raise new capital from the market through issuance of fresh shares or stake sale.

The amount is the interest payable on Rs 579 crore, which the court in 2017 had asked SpiceJet to deposit as part of the share transfer dispute. SpiceJet had deposited the entire amount through a bank guarantee of Rs 329 crore and a deposit of Rs 250 crore.

SpiceJet’s net worth has eroded completely and it will find it deposit to deposit the amount, as the coronavirus pandemic hurts revenue of airlines. The company’s negative net worth at the end of March 31 stood at Rs 1,580 crore and cash balance at mere Rs 42 crore ,while liabilities like lease rentals, payment to suppliers are accumulating.

The company’s stock fell by 3.26 percent after the court order.

“Judgement Debtor (in this case SpiceJet and promoter Ajay Singh) is hereby directed to deposit a sum of Rs 242.93 crore as post-award interest sum within a period of six weeks. In the event the amount is not deposited, the Decree Holder(in this case Kalanithi Maran and his firm KAL Airways) shall be at liberty to seek directions to maintain status quo with respect to shareholding of SpiceJet Limited and Ajay Singh,” said the court.

The case relates to a dispute arising out of non-issuance of warrants in favour of Maran, after transfer of ownership to Ajay Singh, the controlling shareholder of SpiceJet.

Maran had sold his entire 58.46 per cent stake, amounting to 350.4 million shares in SpiceJet to Singh for a nominal Rs 2 in 2015, after a financial crunch led to a change in ownership of the airline.

The two sides have been locked in litigation since then, with Maran accusing SpiceJet and Singh of breach of agreement for not issuing him 189 million share warrants and preference shares, despite his Rs 6.79 billion infusion. He claimed Rs 1,300 crore from SpiceJet and Singh.

The warrants, if converted into equity, would have given Maran and his KAL Airways a 24 per cent stake in the airline. SpiceJet contends shares could not be issued as, it did not get the BSE exchange’s approval. In July 2018, an arbitration tribunal ruled in SpiceJet’s favour, rejecting the Maran’s Rs 1,300 claim for loss on account of non-issuance of share warrants.

However, Maran will be entitled to a refund of Rs 579 crore, the subscription amount he made for warrants and preference shares.