Tribunal Rules in Favour of SpiceJet in Rs.1323-Crore Spat
What is the first thing that comes to your mind when I say SpiceJet?
To sum it up in a tagline, it would be,
Fly cheap, fly SpiceJet.
Lately, there has been controversy surrounding Spice Jet.
An arbitration tribunal has rejected the Rs 1323-crore damage claim from SpiceJet Ltd. It has also denied a bid by Kalanithi Maran to take control of the airlines after a bitter share transfer dispute.
History of the Spat
A tribunal was created in 2016 on the orders of the Delhi High Court to decide the share transfer dispute.
It was held that there was no breach of the share sale and purchase agreement reached between Kalanithi Maran, who is the former owner of Spice Jet and current promoter Ajay Singh in late January 2015.
SpiceJet today said there is no financial impact from the verdict, as most of the refund of Rs 370 crore has already been deposited in an escrow account created by Delhi HC. Additionally, the tribunal has allowed a counterclaim of Rs 29 crores.
Rejection of Maran’s Claims
SpiceJet Ltd informed that, an arbitration tribunal rejected Maran’s claims of damage of Rs.1323-crore, because Spice Jet had not issued convertible warrants and preference shares to him and his company, Kal Airways.
The arbitration proceedings were concluded in April 2018 and the arbitral award is unanimous.
While the tribunal has asked Maran to pay Singh and the airline Rs 29 crores in penal interest, Singh was asked to refund Rs 579 crore plus interest to Maran.
Nitty-Gritty of the SpiceJet Dispute
In February 2015, Maran of Sun Network and Kal Airways, had transferred their 58.46 % to SpiceJet, to Singh for Rs 2 along with Rs 1,500 crore of debt the airline was grounded due to a severe cash crunch.
Singh was the first co-founder of the airline and now, the chairman and managing director.
As a part of the agreement, Maran and Kal Airways had claimed to have paid SpiceJet Rs 679 crore for issuing warrants of Rs 18.91 crore at a conversion price of Rs 16.30 and preference shares.
Maran’s Statement
But according to Maran, the convertible warrants and preference shares were not issued, nor was the money returned, claiming to have cost him over Rs 1,300 crores, forcing him to move to the Delhi High Court.
“If there is no compensation coming, he should be allowed to regain SpiceJet’s ownership.” The warrants, if converted into equity, would have given Maran and Kal Airways 24% of ownership in the airline.
Singh and his family currently own over 60% in the airline, against under 2% before Maran exited the airline.
Official Statement by SpiceJet
An airline official said the verdict establishes that Singh is the principal promoter and shareholder of the airline and there won’t be any dilution of the stake.
SpiceJet’s stock was up by more than 5% today morning on account of this news.