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SpiceJet breached its obligations by not issuing warrants, says Sun Group CFO

SpiceJet breached its obligations by not issuing warrants, says Sun Group CFO

SpiceJet breached its obligations by not issuing warrants, says Sun Group CFO
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By Latha Venkatesh   | Sonia Shenoy  Aug 3, 2018 9:43:02 AM IST (Updated)

SpiceJet’s former promoter, Kalanithi Maran of Sun Group, will contest the ruling of an arbitration panel that rejected his claim of damages and repossession of control of the airline after a bitter share transfer dispute.

SpiceJet’s former promoter, Kalanithi Maran of Sun Group, will contest the ruling of an arbitration panel that rejected his claim of damages and repossession of control of the airline after a bitter share transfer dispute.

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SL Narayanan, CFO of Sun Group spoke to CNBC-TV18 about the recent developments. Here's the full transcript of the interview:
Watch:
Q: The arbitration order has not gone the Maran way. What is the next step? You will appeal?
A: We plan to approach the High Court of jurisdiction. In this case the Delhi High Court. The share purchase agreement has not been carried out in full spirit and therefore we believe that we have a strong case on restitution. We will be approaching the Delhi High Court as soon as we are ready.
Q: Why do you think restitution applies in this case? Why are you confident of a more substantive claim under the section 65 of the contract act?
A: Essentially the deal was that the erstwhile promoters which is Mr. Maran and KAL Airways would put in some money into the company and part of it was towards making the partly paid warrants fully paid; there were 18.91 crore warrants and in addition about 370 crore was to be brought in as preference shares. So along with that certain other transfers also took place. So later it became apparent that SpiceJet could not carry out their obligations because it was impossible. Therefore, in our opinion section 65 clearly applies and the whole agreement should fall and the parties ought to be restored to their earlier positions because we have done whatever that was required to be done by all applicable statutes like we called a board meeting, we got the approvals in an extraordinary general meeting, the price on 18.91 crore warrants was calculated as per the applicable Sebi regulations. So we have done all that in good faith and therefore we believe that we are entitle to a lot more than the Rs 579 crore that has now been ordered to be refunded with interest.
Q: SpiceJet has been claiming that they could not issue the warrants to you because the BSE not giving approval. Will BSE also be impleaded against?
A: We have absolutely no locus with BSE. BSE is the stock exchange that SpiceJet ought to be dealing with. We were the exiting promoters. Our contract is with the company and we believe that the company has breached its obligations.
Q: How much in terms of numbers. If you can tell us what is the refund that Mr. Maran is entitled to. How much has come through so far and has it already been deposited into an escrow account and any more money expected?
A: The total amount that was ruled by the Delhi High Court, the division bench was about Rs 579 crore and if my memory serves me right, it was Rs 250 crore to be secured through cash deposits and another Rs 329 crore to be secured by a bank guarantee – that has been done and that is what now the arbitrators have also ordered to be repaid and the more substantial part is the 18.91 crore warrants, had that been complied with we would have got about 22 percent of the fully diluted equity and that is an essential part of the whole deal which we constructed.
Q: That is what you will be arguing for in the High Court to get back that 22 percent stake?
A: Since that is now impossible because BSE says that cannot be done. We say that the share purchase agreement itself has to be reversed because if something cannot be done because of sheer impossibility of performance, it’s a very fundamental proposition and law under section 65 and that is what our lawyers will be arguing before the Delhi High Court.
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