On Monday, the Delhi High Court firmly ended SpiceJet’s newest attempt to improve its cash flow. It rejected their request to review the decision, and so the order to deposit 144.5 crore in the long-standing dispute with Kalanithi Maran and KAL Airways remains in place. The court also added a 50,000 cost to SpiceJet, which makes the airline’s already difficult financial situation even worse.
Why the order matters now
SpiceJet told the court that it doesn’t have much cash available, and this is because of problems related to the conflict in the Middle East and a huge increase in the price of aviation turbine fuel (jet fuel). The airline stated that approximately 22,000 passengers and 7,000 employees have been affected by the recent flight issues.
SpiceJet said that immediately paying 144.5 crore could stop the airline from continuing to operate. However, this request for more time has been decisively denied. Justice Subramonium Prasad rejected the review requests made by SpiceJet and its owner, Ajay Singh, and ordered them to pay the 50,000 cost. This means they must still deposit the money with the court, and can’t offer another type of guarantee.
Court stance and cash-first approach
Previously, the court had said no to SpiceJet’s offer to provide a piece of land that they fully own, in place of the money. The court is sticking to this decision, even though SpiceJet has repeatedly said they are in financial trouble.
SpiceJet had offered a one-acre business property in Gurugram, saying it is free of any claims against it and is worth about re148 crore. They said they were ready to hand over the documents proving they own the land. But the court insisted on a cash deposit, and wouldn’t agree to take the property instead of the money.
What SpiceJet proposed
SpiceJet also told the court that the government was willing to provide some help. Even so, the court is not changing its order about the deposit.
KAL Airways, which is owned by Sun Group chairman Kalanithi Maran, is against any changes to the order. They say SpiceJet’s debts are much higher than they are saying, and that the airline actually owes over 400 crore (including interest) from the agreement reached by an arbitration panel.
Here are the core takeaways from the ruling and submissions before the court:
– Review plea dismissed; cash deposit order stands
– 144.5 crore to be deposited with the registry
– 50,000 cost imposed on SpiceJet and Ajay Singh
– Property offer worth approximately 148 crore rejected
– Disruptions affected around 22,000 passengers, 7,000 employees
Maran and KAL Airways position
Maran’s legal team said that SpiceJet isn’t calculating the interest correctly on its own records, and don’t want the money replaced with property. They believe the agreed amount must be paid in cash. They also claim SpiceJet’s request to review the decision is just a way to put off following the order.
The problem started with a rescue deal in 2015. In February 2015, Maran and KAL Airways gave Ajay Singh 35.04 crore of their shares (58.46% of the company) for only Rs 2, when SpiceJet was in a serious crisis. As part of this deal, Maran had put about 679 crore into the company using convertible warrants and preference shares.
How the long dispute unfolded
Later, Maran said these investments hadn’t been issued by the new leadership and asked for his money back, leading to arbitration. In July 2018, the arbitration panel said Maran wasn’t entitled to over 1,300 crore in damages, but did say SpiceJet had to refund 579 crore plus interest.
The legal battle continued. In February 2023, the Supreme Court ordered that a 270 crore bank guarantee be cashed in and that SpiceJet pay 75 crore for the interest. They warned that if SpiceJet didn’t do this, the original agreement would be fully enforced. SpiceJet says it has already paid around 730 crore to Maran and KAL Airways (including the original money and the interest), but they still disagree about how much is still owed.
What comes next
In January, the Delhi High Court said that 194.51 crore was still due from previous orders. After taking 50 crore that SpiceJet had already deposited into account, they ordered SpiceJet and Ajay Singh to deposit the remaining 144.5 crore. Also, in May 2024, a panel of judges overturned a single judge’s decision that had supported the arbitration award of a 579 crore refund plus interest, and sent the case back to be looked at again.
Now that the request to review the case has been turned down, SpiceJet is still legally required to make the deposit. SpiceJet is already struggling with flight problems and rising costs, and this decision makes the demand for money even more pressing, and they said it could be the final blow. Everyone will be watching to see if SpiceJet follows the court’s orders, as the legal and financial details of the case continue to develop.
