Kalanithi Maran loses Rs1,323-cr arbitration against SpiceJet
23 July 2018
An arbitration tribunal has rejected the claim of former Spicejet owner Kalanithi Maran and his company Kal Airways Ltd (KAL) for Rs1,323-crore damages from Spicejet for failure to issue warrants and preference shares. The court, however, directed SpiceJet and its current owners to refund the Rs579 crore to Maran, including interest.
An arbitration tribunal has rejected the Rs1,323-crore damages claim from SpiceJet by its previous owner Kalanithi Maran in a share transfer dispute, the airline said on Saturday.
Maran and his KAL Airways had sought compensation from SpiceJet and its chairman and managing director Ajay Singh for failing to transfer warrants in his name when the airline changed hands in 2015.
Maran had moved Delhi High Court against SpiceJet claiming that SpiceJet and its current owner failed to issue convertible warrants and preference shares as per the transfer agreement and also did not refund his money.
The tribunal, comprising retired Supreme Court Judges Arijit Pasayat, Hemant Laxman Gokhale and KSP Radhakrishnan ruled that there was no breach of a share sale and purchase agreement entered into between Maran and the current Spicejet promoter Ajay Singh in January 2015 and that non-issue of shares were due to regulatory glitches.
In a stock exchange filing on Saturday, Spicejet said that the tribunal constituted by the Delhi High Court in 2016 rejected Maran's claim to damages of Rs1,323 crore for not issuing warrants to him and KAL Airways, but awarded him a refund of Rs579 crore with interest.
SpiceJet defended the non-issue of convertible warrants and preference shares saying that regulatory obstacles had come in the way.
"The tribunal has held that there was no breach by the company (SpiceJet) in pursuing the approval from relevant authority and since the same was not received for reasons not attributable to the company, it cannot be held to be in breach or be made liable for damages," the filing said.
But, the tribunal said, “Since the warrants / shares cannot be issued any longer, the amount of about Rs308 crore earlier received by the company as advance towards subscription of warrants is to be refunded to the claimants along with interest of 12 per cent per annum for a period of 30 months.
"Accordingly, no further warrants / shares are required to be issued by the company to the claimants," it added.
Maran and his KAL Airways transferred their 58.46 per cent share in SpiceJet for Rs2 to Singh, a co-founder of the low-cost carrier, who assumed its liabilities of the debt-laden airlines, in 2015.
As part of the agreement, Maran and KAL Airways said they paid SpiceJet Rs679 crore for issuing warrants and preference shares.
The warrants, if converted into equity, would have given Maran and KAL Airways ownership of 24 per cent stake in SpiceJet.
"The company will like to clarify that the aggregate principal amount payable, including the amount of Rs270 crore towards cumulative redeemable preference shares (if and when the same becomes payable) has already been deposited by the company with the Registrar General of the Delhi High Court in September 2017," SpiceJet said.
Singh and his family currently hold 60.25 per cent in SpiceJet.