SC lets SpiceJet seek ₹144.5 crore relief from HC on bailout plea | Today’s news
In a relief to low-cost carrier SpiceJet, the Supreme Court on Tuesday allowed the airline to approach the Delhi High Court again to reconsider its plea against ₹144.5 crore deposit order in its long-running arbitration dispute with Kalanithi Maran and KAL Airways.
The relief comes after the airline warned it could stop if forced to make an immediate payment without the proposed ₹5000 crore government support package for airlines.
Justice PS Narasimha and Justice Alok Aradhe asked the Delhi High Court to consider further developments, including the Centre’s support measures and a proposed relief package for airlines affected by the crisis in West Asia.
Referring to the government’s support measures, the court noted that the Delhi High Court may consider the airline’s plea in the light of the “policy decision regarding guarantees for emergency credit lines” and the prevailing situation.
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Deposit dispute
The Supreme Court was hearing a fresh plea by SpiceJet challenging the Delhi High Court’s May 4 order dismissing the airline’s review petition seeking relief from ₹144.5 crore deposit direction and deposited a ₹50,000 carrier costs for making repeated applications.
During the hearing, senior advocate Mukul Rohatgi, appearing for SpiceJet, sought about three months’ time to pay, saying the timeline was in line with the government’s support package announced on May 5 for the aviation industry, which he said was expected to be operational around July.
Rohatgi said the Center has announced extraordinary credit support measures for the aviation sector, including a proposal ₹5,000 crore for the airlines and they have been looking for space till these funds are available.
He told the court that the airline currently has little liquidity and nothing substantial to offer except a one-acre commercial property in Gurugram’s Udyog Vihar as collateral. According to him, the property was unencumbered and monetized, although an immediate sale was not possible.
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According to Rohatgi, the airline risked closure if the relief was not granted.
“I am saying that if the government gives me help, it will take about 12 weeks for government support to come. The help was announced on May 5 and it is likely to happen by July 10. Otherwise, the airline will shut down tomorrow. We have thousands of employees,” Rohatgi told the court.
Rohatgi further said that SpiceJet has already paid approx ₹729 million of the total amount of the arbitration award of approx ₹873 million crowns including interest, which means that almost 83% of the fees have already been paid and only ₹144.5 million crowns remained unpaid.
He argued that SpiceJet, now “the smallest of the three airlines”, was severely affected by disruptions caused by the West Asian crisis and rising operating costs.
Maran’s reflection
Senior advocate Jayant Mehta, appearing for KAL Airways and Kalanithi Maran, opposed the suit and argued that SpiceJet has repeatedly delayed compliance despite several court orders and opportunities.
Maran’s side said the amount became due in February 2023 and that the airline had consistently relied on financial distress arguments for years. She claimed the latest plea was another attempt to delay payment.
KAL Airways also claimed that ₹144.5 million represented only the amount owed and not the total liability.
The origin of the dispute
The legal battle dates back to 2015 when KAL Airways transferred its stake in SpiceJet to promoter Ajay Singh during a period of financial stress at the airline.
As part of the transaction, Maran poured himself ₹679 crore to SpiceJet through convertible warrants and preference shares. Maran later claimed that these instruments were not issued by the new management, leading to arbitration proceedings.
In July 2018, an arbitral tribunal ordered SpiceJet to return the money ₹579 crores along with interest.
The matter has since gone through several rounds of litigation in the Delhi High Court and the Supreme Court.
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In February 2023, the Supreme Court ordered the monetization of a ₹270 crore bank guarantee and ordered SpiceJet to pay ₹75 million crowns in interest with a warning that failure to comply will make the arbitration award fully enforceable.
This was noted by the Delhi High Court in January this year ₹According to earlier instructions, 194.51 million crowns remained in circulation. After editing ₹50 crore already deposited, the court directed SpiceJet and promoter Ajay Singh to deposit the remaining ₹144.5 crore, triggering the latest round of litigation over the deposit order.
