NEW DELHI – In a significant development for budget airline SpiceJet, the Delhi High Court on Tuesday rejected its plea to submit a property title deed as security instead of depositing ₹144 crore in a long-standing share transfer dispute. The case involves the airline's former promoters, Kalanithi Maran and KAL Airways.
SpiceJet had proposed offering an unencumbered one-acre land parcel in Udyog Vihar, Gurugram, valued between ₹400-500 crore, as security. However, the court maintained its stance, requiring the cash deposit as part of the ongoing legal proceedings.
Background of the Share Transfer Dispute
The legal battle originates from a share transfer agreement made in February 2015. At that time, Kalanithi Maran and his company, KAL Airways, transferred their 58.46 percent stake in SpiceJet to current chairman Ajay Singh. In 2017, Maran and KAL Airways approached the high court, seeking the transfer of 180 million warrants redeemable as equity shares, which they claimed were part of the agreement.
An arbitral tribunal, appointed by the court, ruled on July 20, 2018. While it rejected Maran's substantial claim of ₹1,323 crore in damages for the non-issuance of warrants, it did award a refund of ₹579 crore with interest to Maran and KAL Airways. Maran subsequently challenged this arbitral award in the high court, particularly its rejection of his damages claim and his bid to regain control of the airline.
Following this, the Delhi High Court had directed SpiceJet and Ajay Singh to deposit ₹579 crore. This amount was to be secured through a combination of a bank guarantee of ₹329 crore and a cash deposit of ₹250 crore. The current rejection pertains to the airline's attempt to substitute a portion of this required deposit with property.
Operational Challenges Persist
This legal setback comes amidst fresh operational pressures for SpiceJet. Reports indicate that approximately 40 pilots operating the airline's Q400 aircraft have refused to fly until their pending salary dues are cleared. The Airline Pilots’ Association of India (ALPA India) has publicly backed these pilots, expressing solidarity with their demands.
SpiceJet has been grappling with prolonged financial and operational difficulties, leading to increased scrutiny from the Directorate General of Civil Aviation (DGCA). The airline's ability to navigate these challenges, both legal and operational, remains a critical focus for stakeholders and industry observers.