SpiceJet’s INR 600 crore offer to settle the share dispute rejected by Maran and KAL Airways

The former promoter of Spicejet, Kalanithi Maran has rejected the offer made by the airline for a one-time settlement to end the long-standing share-transfer dispute between the two parties, the Supreme Court was informed on February 14.

The Supreme Court bench headed by Chief Justice of India NV Ramana had asked Maran on February 10 to consider the one-time settlement offer made by SpiceJet during the hearing before the court.

Maran’s lawyer, Senior Counsel Maninder Singh, informed the court today that the offer of lump-sum pay-out of INR 600 crore is not found to be feasible. This, the counsel said, was because the total amount owed to Maran was around INR 920 crore.

SpiceJet’s INR 600 crore offer to settle the share dispute rejected by Maran and KAL Airways

The court sought to know the basis on which this valuation was arrived at and has granted time to Maran to file the response on the issue. The Supreme Court will hear the case next on March 2.

Maran, and his firm KAL Airways, was before the Supreme Court urging it to lift the stay imposed on the Delhi High Court order which had directed SpiceJet to deposit INR 243 crore towards interest payable to Maran in the share transfer dispute.

According to the arbitration award, SpiceJet owed INR 579 crore to Maran as a refund which became the principal amount as well as interest on it. The high court’s order for deposit of the interest amount, however, was stayed when SpiceJet challenged it before the top court.

SpiceJet owed INR 579 crore to Maran as a refund which became the principal amount as well as interest on it.

When the plea for vacating the stay order was being heard by the Supreme Court, SpiceJet proposed to make a total payout of INR 600 crore to Maran as a one-time settlement provided that Maran would not file any execution petitions against the airline.

SpiceJet had earlier offered two proposals for settlement of the shareholding dispute with the Marans. The airline had offered to repay INR 600 crore in total for settling the arbitral dispute. Alternatively, SpiceJet had to pay INR 100 crore and argue the dispute expeditiously before the Delhi High Court.

Maran stressed the validity of the interest amount of INR 243 crore and highlighted that it was an “admitted amount” and the media baron held a decree for the refund and interest monies. This decree would be rendered merely a “paper decree” if SpiceJet is wound up by the Madras High Court order passed against it, Maran’s counsel had told the court.

SpiceJet had to pay INR 100 crore and argue the dispute expeditiously before the Delhi High Court.

The Supreme Court, however, proceeded to ask Maran to consider the offer SpiceJet had made.

The dispute dates back to 2015 when Maran and his firm KAL Airways transferred 58.46% of the shares held by them to the present Chairman of SpiceJet, Ajay Singh, for INR 2. Singh, who was the co-founder of the airline, had taken on the airline’s liabilities valuing at INR 1,500 crore.

Through this share transfer agreement, Maran was to be issued warrants and preference shares and had paid INR 679 crore towards the same.

ALSO READ – SC asks Maran and KAL Airways to consider SpiceJet’s settlement offer of INR 600 crore

In 2017, Maran moved the Delhi High Court saying that he was neither issued the preference shares as agreed on nor was the money paid by him refunded. The high court referred the case for arbitration.

The arbitration tribunal, in July 2018, awarded a refund to Maran to the tune of INR 579 crore plus interest but rejected his claim for INR 1,323 crore in damages. When Maran challenged this arbitration award before the high court, the court favoured Maran and directed SpiceJet to deposit INR 243 crore towards the interest amount.

This order of the high court was stayed by the Supreme Court shortly thereafter and came up before the top court now with Maran seeking vacation of the stay.

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