₹145cr deposit must be paid: Delhi High Court to SpiceJet
What's the story
The Delhi High Court has rejected a review plea by budget airline SpiceJet, asking it to deposit ₹144.5 crore in its long-running arbitration dispute with Kalanithi Maran and KAL Airways Pvt Ltd. The airline had sought relief from an earlier order directing the same amount to be deposited within a stipulated time frame. The court also imposed a cost of ₹50,000 on SpiceJet for filing the petition.
Financial impact
SpiceJet warns of collapse, offers property as alternative
SpiceJet has claimed that it is facing a severe liquidity crunch, worsened by the ongoing West Asia conflict and rising aviation turbine fuel (ATF) prices. The airline warned that enforcing the cash deposit could push it toward collapse, as an immediate outflow of ₹144.5 crore could jeopardize its operations. The airline had suggested offering an unencumbered immovable property in Gurugram worth approximately ₹148 crore as security instead of a cash deposit, but was rejected by the court.
Disputed liabilities
KAL Airways disputed SpiceJet's claims
KAL Airways, owned by Sun Group chairman Kalanithi Maran, disputed SpiceJet's claims that its liabilities are higher than what the airline has claimed. The company told the court that SpiceJet owes over ₹400 crore, including interest, in the arbitration dispute. Maran's side also opposed the proposal to replace a cash deposit with property and argued that the arbitral award must be satisfied through monetary payment.
Dispute history
Dispute dates back to January 2015
The dispute dates back to January 2015, when Maran and KAL Airways sold their 58.46% stake in SpiceJet to the airline's promoter, Ajay Singh, during a financial crisis. As part of the deal, Maran had invested some ₹679 crore into the airline via convertible warrants and preference shares. Later, Maran alleged that these instruments were not issued by the new management and sought a refund, triggering arbitration proceedings.
Payment disputes
Arbitral tribunal rejected Maran's claim, ordered SpiceJet to refund
In July 2018, an arbitral tribunal rejected Maran's claim for over ₹1,300 crore in damages but ordered SpiceJet to refund ₹579 crore along with interest. The matter has since seen multiple rounds of litigation. In February 2023, the Supreme Court directed the encashment of a ₹270 crore bank guarantee and asked SpiceJet to pay ₹75 crore toward interest, warning non-compliance would render the award fully executable.