Indian low-cost carrier SpiceJet has been asked by India’s Supreme Court to pay ₹2.7 billion ($32.5 million) in the next two weeks to Kalanithi Maran in a share transfer dispute case. The dispute goes back to 2015 when then-promoter Kalanithi Maran agreed to transfer his stockholding to the airline’s co-founder Ajay Singh.

What’s the dispute?

In 2015, SpiceJet’s then-promoter Kalanithi Maran agreed to transfer his stockholding in SpiceJet to the airline’s co-founder Ajay Singh in exchange for 189 million convertible warrants.

Maran also provided Singh with approximately ₹6 billion ($72 million) to help revive the airline during its financial crisis. However, it all went south after Maran claimed he never received the convertible warrants as promised and approached the courts for a settlement.

Photo: Wirestock Creators | Shutterstock

Upon the high court’s order, an arbitration tribunal consisting of three retired Supreme Court judges was formed, which gave a unanimous decision that SpiceJet was to pay a sum of ₹5.7 billion ($69 million) plus interest to Maran. Unsatisfied, Maran went to the court again, demanding ₹13.2 billion ($159 million) in damages for non-issuance of warrants, which was rejected.

What’s happening now?

Last year, SpiceJet said that it had already deposited a bank guarantee of ₹2.7 billion ($32.5 million) with the Delhi High Court and was willing to pay an additional ₹300 million ($3.6 million) to end the dispute.

Now, the Supreme Court of India has asked the airline to fulfill that obligation within the next two weeks, along with a deposit of ₹75 million ($9 million) in interest dues. The airline released a stament that said,

“With regards to the Supreme Court order in the matter relating to the dispute between SpiceJet and its former promoter Kalanithi Maran and his firm KAL Airways, it is clarified that the overall amount in dispute is Rs 578 crore of which Rs 308 crore has already been deposited.

“The remaining amount of Rs 270 crore is reserved with the company in cash against which a bank guarantee has been given. This amount of Rs 270 crore will be comfortably discharged as per the direction of the Hon’ble Supreme Court.”

Photo: Maxene Huiyu | Shutterstock

Shares fall

Following the announcement of the airline being asked to pay millions to Maran, SpiceJet’s shares recorded a dip of around 4% at the National Stock Exchange. A similar slump was seen at the Bombay Stock Exchange, too.

SpiceJet has been involved in several disputes in the last few years. One of the cases involved the carrier being issued a winding-up order regarding debts of around $24 million to a Swiss engineering company SR Technics. The dispute was resolved in August 2022.

What are your views on this? Please leave a comment below.