Budget carrier SpiceJet has said it will seek a ₹450-crore refund from its former promoter Kalanithi Maran and his firm KAL Airways following a favourable Delhi High Court ruling, the carrier said in a statement.
The court decision on May 17 overturned a previous order that required SpiceJet to repay Maran over ₹579 crore plus interest for a disputed share transfer in 2015.
In January 2015, Ajay Singh, SpiceJet’s co-founder and current chairman, bought back the airline from Maran after it faced financial difficulties. As part of the agreement, Maran claimed to have invested ₹679 crore in SpiceJet for convertible warrants and preference shares.
However, Maran later alleged that SpiceJet never issued these shares and demanded the money back, along with additional damages.
An arbitration tribunal in 2018 sided with Maran, ordering SpiceJet to refund ₹579 crore plus interest. SpiceJet and Singh challenged this decision in the Delhi High Court.
A single judge in July 2023 upheld the arbitration award. However, a division bench of the court overturned that order on May 17, 2024, finding flaws in the initial arbitration process.
With the latest court ruling in their favour, SpiceJet is seeking a ₹450-crore refund from the total ₹730 crore it had already paid to Maran and KAL Airways (including principal and interest).
The court has also noted that interest amounting to penal interest had been charged despite SpiceJet not being in any breach of the share purchase agreement. These facts not being considered by the single judge, the appeals of Ajay Singh and SpiceJet have been allowed, and the impugned judgment dated July 31, 2023, has been set aside.
This development is a significant financial relief for SpiceJet, which has been grappling with cash flow issues. The final outcome of the ongoing legal battle remains to be seen.