The Delhi High Court today dismissed the pleas of budget carrier SpiceJet and its co-founder Ajay Singh against a single judge order directing it to deposit Rs 579 crore in connection with a share transfer dispute with previous owner Kalanithi Maran.
A bench of Justices S Ravindra Bhat and Yogesh Khanna, however, provided them some relief by allowing them to deposit, in the court, part of the amount by way of bank guarantee by July end and the remaining in cash by August 31.
Immediately after the order was pronounced, lawyers appearing in the matter sought clarification regarding the exact bifurcation of the amount, as the bench initially said Rs 250 crore in cash and Rs 229 crore as bank guarantee should be deposited, which was Rs 100 crore short of the total amount.
The bench said it will “take care of the error”.
It said it has modified the single judge’s order directing the airline to deposit the entire amount in installments over a period of 12 months.
It said the modification was “essential” in light of the “unpredictable nature of likely injury that may be caused to the commercial operations of the company if entire amount is secured through a deposit”.
SpiceJet and Singh had challenged the single judge’s July last year’s interim order saying the court did not have the jurisdiction.
The single judge’s order had come on a civil suit by Sun Group chief Kalanithi Maran and his Kal Airways.
In their suit, Maran and his airline had sought issuance of stock warrants in SpiceJet to them as per a sale purchase agreement (SPA) of 2015 which had led to the transfer of ownership of the budget carrier to Ajay Singh.
Maran and his airline company had alleged before the single judge that despite giving Rs 579 crore to SpiceJet, the carrier had failed to issue them the warrants or allot tranche one and two of Convertible Redeemable Preference Shares and that the amount was not utilised for paying statutory dues due to which they were also facing prosecution.
Apart from ordering that the amount be deposited in the court, the single judge had also asked Spicejet and Maran to appoint an arbitral tribunal to decide the share transfer dispute between them in a year.
The amount was to be deposited in five instalments with the first one in August 2016, the court had said.
Market regulator SEBI had earlier expressed its inability before the single judge to approve the board resolution passed by SpiceJet for issue of warrants in favour of Maran and his Kal Airways.
The board resolution was passed on the court’s direction.
Under the SPA, Maran and Kal Airways had transferred their entire 350,428,758 equity shares (58.46 per cent stake) in the airline to Ajay Singh.
According to the SPA, Maran and Kal were to receive the redeemable warrants in return for around Rs 679 crore that they were to give to the airline towards operating costs and debt payment, Maran had said in his plea.
SpiceJet had earlier told the court that the change of ownership was effected as a rehabilitative measure to address the liability of Rs 2,000 crore incurred by the airline when it was under the management of Maran.
It had also claimed that every penny had been utilised towards operations and discharge of liabilities.