SpiceJet to seek refund of Rs 450 crore from Kalanithi Maran

Homegrown airline SpiceJet will seek a refund of Rs 450 crore out of the Rs 730 crore it previously paid to former promoter Kalanithi Maran and his firm KAL Airways. This comes after a Delhi High Court order on May 17 ruled in favour of SpiceJet and promoter Ajay Singh in a long-standing share transfer case against Maran and KAL. 

The May 17 order of the Delhi High Court overturned a previous order by a single-judge bench, which enabled SpiceJet to claim the substantial refund based on legal advice. 

SpiceJet had paid a total of Rs 730 crore, including Rs 580 crore in principal along with an additional Rs 150 crore to Maran and KAL. With the order set aside, SpiceJet has said that it is set to receive a refund of Rs 450 crore.

Meanwhile, SpiceJet shares rose 3.69 per cent in Wednesday's trade to hit a day high of Rs 63.25. Around 25.72 lakh shares changed hands today at the time of writing this story. The figure was higher than the two-week average volume of 22.62 lakh shares.

WHAT IS THE SHARE TRANSFER CASE?

The share transfer case dates back to 2015 when Maran transferred his 58.46 per cent stake in SpiceJet to Singh, expecting to receive redeemable warrants in return for the investment. He was entitled to 18 crore warrants, which equated to 26 per cent shareholding. However, he claimed that he received no money and no warrants, leading to loss of Rs 1,323 crore.

Maran approached the Delhi High Court, which, in July 2018 ordered SpiceJet to refund Rs 270 crore and pay 12 per cent annual interest on amounts paid for warrants and 18 per cent on sums awarded if unpaid on time. 

However, the tribunal did not find any breach in the share sale agreement, rejecting Maran’s claims. Both the parties approached the tribunal against the order.

“In its ruling, the Division Bench held that the Single Judge had erred in dismissing the Section 34 petitions of Ajay Singh and SpiceJet without due consideration of the claims of patent illegality and the order of refund passed against SpiceJet despite admitted breaches on the part of KAL Airways and Kalanithi Maran,” the airline said in a statement. 

The airline highlighted the court’s order that stated that interest amounting to penal interest had been charged despite SpiceJet not being in any breach of the share sale. “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,”  it said.