Encash bank guarantee, pay Rs 270 crore to Kalanithi Maran: Supreme Court orders SpiceJet

The Supreme Court on Monday said the bank guarantee of Rs 270 crore of SpiceJet must be encashed immediately and the money be paid to media baron Kalanithi Maran and his Kal Airways towards dues from the arbitral award of Rs 578 crore.

A bench of Chief Justice of India D Y Chandrachud and justices P S Narasimha and J B Pardiwala also directed Spicejet to pay within three months Rs 75 crore to Maran and Kal Airways towards the interest component on the arbitral award.

"We direct that the respondents/decree holder (Maran and Kal Airways) having already received Rs 308 crore out of the arbitral award of Rs 578 crore, the bank guarantee of Rs 270 crore shall be encashed forthwith and the amount shall be paid over to the decree holder...," the bench said.

It added that this will ensure that the principal sum due in the award is paid almost in entirety.

The top court was hearing SpiceJet's appeal against the November 2, 2020, order of the Delhi High Court, asking the airline to deposit around Rs 243 crore as interest in connection with the share transfer dispute with its former promoter, Maran, and Kal Airways. On November 7, 2020, the apex court had stayed the high court order asking SpiceJet to deposit around Rs 243 crore as interest in connection with the share transfer dispute.

The Supreme Court said till three months, the execution of award will remain stayed and if Spicejet made any default in compliance with these directions for payment, the award will become executable.

Maran has made a claim of Rs 362 crore in interest dues which was vehemently opposed by Spicejet.

The apex court allowed Spicejet to approach the Delhi High Court and urge for a lower interest rate. It requested the high court to make an endeavour to expedite the hearing in the matter.

SpiceJet and its promoter Ajay Singh were asked to deposit around Rs 243 crore as interest payable on Rs 578 crore, which the high court had in 2017 asked the airline to deposit under the 2018 arbitration award in the share-transfer dispute.

The high court had granted six weeks to SpiceJet to make the payment and the deadline for the same expired on October 14, 2020. After this, Maran and his firm had moved the high court for attachment of the entire shareholding of Singh in Spicejet and taking over the management for the non-payment of Rs 243 crore. The top court had taken note of Spicejet's appeal and passed the interim order, staying the high court order.

Maran and Kal Airways had moved the high court over the share-transfer dispute with SpiceJet, demanding that 18 crore warrants redeemable as equity shares be transferred to them. The high court had directed SpiceJet and Singh to deposit Rs 578 crore in the high court's registry.

SpiceJet was permitted to furnish a bank guarantee for Rs 329 crore and make a cash deposit of the remaining sum crore before the high court. The apex court, in July 2017, dismissed SpiceJet's appeal against the high court order.

On July 20, 2018, the arbitral tribunal rejected Maran's claim of damages of Rs 1,323 crore for not issuing the warrants to him and Kal Airways but had awarded him a refund of Rs 578 crore plus interest.

Maran, the owner of Sun TV Network, then moved to the high court against the arbitration award. The matter pertained to a dispute arising out of the non-issuance of warrants in favour of Maran after the transfer of ownership to Singh, the controlling shareholder of SpiceJet.

The dispute started after Singh took back control of SpiceJet in February 2015 amid the airline facing a financial crisis. Maran and Kal Airways had transferred their entire 35.04 crore equity shares in SpiceJet, amounting to a 58.46 per cent stake in the airline, to its co-founder Singh in February 2015 for just Rs 2.

Click Here For Latest Updates On Stock Market | Zee Business Live