The battle for SpiceJet is likely to get interesting going ahead. The airline’s former promoter Kalanithi Maran wants to takeover the reigns from current promoter Ajay Singh, who bought it back from Maran after it was grounded for months. Maran will be soon approaching the Delhi high court to regain control of SpiceJet.
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.
Maran and his KAL Airways will move the Delhi High Court to pursue the more substantive claim under Section 65 of the Contract Act seeking restitution so as to regain control of the airline, Sun Group chief financial officer SL Narayanan told CNBCTV18.com. “We are in discussions with our lawyers and we believe we have a very strong case,” he said.
On Friday, the tribunal rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways, but awarded him a refund of Rs 579 crore plus interest. The tribunal, which was created in end 2016 on the orders of the Delhi High Court to adjudicate the share transfer dispute, held that there was no breach of a share sale and purchase agreement reached between Maran and current promoter Ajay Singh in January 2015.
The tribunal, comprising retired Supreme Court judges Arijit Pasayat, Hemant Laxman Gokhale and KSP Radhakrishnan, sided with SpiceJet’s defence that it failed to issue convertible warrants and preference shares — the bone of contention between the two sides — due to lack of approval from relevant authorities. No further warrants or shares are required to be issued by the company to Maran and KAL Airways, SpiceJet said in a stock exchange filing on Saturday.
Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent in SpiceJet, to Singh, the current chairman and managing director, for Rs 2 in February 2015 after its operations were hobbled by a severe cash crunch. Singh, a co-founder of SpiceJet, assumed the airline’s liabilities of around Rs 1,500 crore.
As part of the agreement, Maran and KAL Airways said they paid SpiceJet Rs 679 crore for issuing warrants —18.91 crore at a conversion price of Rs 16.30 — and preference shares. Maran launched litigation in the Delhi High Court against Singh and SpiceJet after he said neither the convertible warrants and preference shares were issued nor the money was returned.
Maran, who runs the Sun TV network, claimed he incurred losses due to the failure to issue warrants. He argued that if there is no compensation coming, he should be allowed to regain SpiceJet’s ownership.
The warrants, if converted into equity, would have given Maran and KAL Airways ownership of 24 percent stake in the airline.
A SpiceJet official said the amount the airline has been asked to pay is in fact already deposited in an escrow account on the orders of the High Court. So, there will be no impact on the company’s balance sheet, he said asking not to be named.
Narayanan, also a director of KAL Airways, said the arbitration award addresses only a part of the reliefs that they had sought. “We are happy that our legitimate claims have been ordered by the panel of arbitrators to be repaid in full with interest,” he said.
Singh and his family currently hold 60.25% in SpiceJet. He owned around 2 percent before Maran exited the airline.