Thursday, August 24, 2023

Delhi HC orders SpiceJet's Ajay Singh to pay ₹100 cr to Marans by Sep 10

The Delhi High Court on Thursday ordered SpiceJet chairman and managing director Ajay Singh to pay ₹100 crore to the airline's former promoter Kalanithi Maran by September 10.

The high court warned Singh that it may attach the airline's assets if the payment is not made by September 10. The budget carrier's CMD appeared in person before Justice Yogesh Khanna of Delhi HC.

SpiceJet says it will honour the Delhi High Court's order and make the specified payment within the prescribed timeframe.

"The Division Bench of the Delhi High Court today admitted the appeal of SpiceJet and Ajay Singh and issued notice to Kalanithi Maran and Kal Airways. The Court also stated that they would grant an expedited hearing in the matter. We are hopeful for an expeditious resolution of the appeal. We are committed to presenting our matter diligently and respectfully, seeking a just and fair resolution," the airline's spokesperson says.

The dispute between the two parties dates back to 2015 when Kalanithi Maran first approached Ajay Singh who had been associated with the airline previously. The ownership of the airline was transferred to Singh for ₹2. At the time of transfer, the company had debt and liabilities outstanding of over ₹3,500 crore with immediate payables of around ₹2,200 crore and its Boeing fleet was reduced from 41 to 17 aircraft.

To keep the debt-laden carrier afloat, Singh asked the Marans to put in a substantial amount of money to clear up dues including tax liabilities and also provided some liquidity to keep the company running. It is this ₹578 crore - invested by the Sun Group at the time - which is now the main bone of contention. At the time of handing control to Singh, the Marans felt that the business had potential, so an agreement was reached whereby SpiceJet would issue cumulative redeemable preference shares (CRPS) that would help them keep one foot in the door but did not offer them any voting rights.

The no-frills airline has witnessed a consistent drop in its market share over the past few months. The Gurugram-based carrier's market share dropped to 4.2% in July from 4.4% in June. The beleaguered airline's market share stood at 5.4% in May, 5.8% in April and 6.4% in March, according to data released by aviation regulator DGCA (Directorate General of Civil Aviation).

24/08/2023 Fortune India

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