An arbitration tribunal has rejected the Rs 1,323-crore damages claim from SpiceJet raised by the airline's previous owner Kalanithi Maran and his company Kal Airways, in a protracted share transfer dispute. Maran had argued that if there is no compensation coming, he should be allowed to regain SpiceJet ownership.
Ajay Singh-led SpiceJet has informed the stock exchanges that on July 20, an arbitration tribunal rejected Maran's claim of damages of Rs 1,323 crore for not issuing convertible warrants and preference shares to him and Kal Airways. The case dates back to January 2015, when Singh, who owned the airline earlier bought it back from Maran for a token sum of Rs 2 along with the Rs 1,500 crore debt burden, after the airline was grounded as it could not even pay its fuel bills.
The tribunal consisted of three retired judges from the Supreme Court, Arijit Pasayat, Hemant Laxman Gokhale and KSP Radhakrishnan. While the tribunal asked Maran to pay Singh and the airline Rs 29 crore in penal interest, Singh was asked to refund Rs 579 crore plus interest to Maran.
The tribunal, set up on the orders of the Delhi High Court, to adjudicate the share transfer dispute, held that there was no breach of a share sale and purchase agreement reached between Maran and current promoter Ajay Singh in late January 2015.
SpiceJet on Sunday said there was no monetary impact from the verdict as most of the refund of Rs 370 crore has already been deposited in an escrow account created by the Delhi High Court.
Additionally, the tribunal has allowed a counter claim of Rs 29 crore. On the dispute related to issue of convertible warrants and preferential shares, the airline said, the tribunal has held that the claimants were to bring in Rs 100 crore required for issuance of CRPS aggregating to Rs 370 crore, and the same has not been deposited by them in the manner provided under the agreement.
The tribunal has advised the parties to explore the possibility of issuance of warrants and in the event such efforts do not fructify in two months' time, the company is required to thereafter refund the amount of about Rs 270 crore (after adjusting the counter claim of Rs 100 crore which has been allowed).
"No further warrants or shares are required to be issued by the company to Maran and Kal Airways," SpiceJet said quoting the award.
Ajay Singh was the first co-founder of the airline and now back as the chairman and managing director has managed to turn the airline around. As part of the agreement, Maran and Kal Airways had claimed to have paid SpiceJet Rs 679 crore for issuing warrants at a conversion price of Rs 16.30 and preference shares. But Maran said neither the convertible warrants nor preference shares were issued nor money returned, claiming to have cost him over Rs 1300 crore, forcing him to move the Delhi High Court.
The warrants, if converted into equity, would have given Maran and Kal Airways 24 per cent ownership in the airline. Singh and his family currently hold over 60 per cent in the airline, against under 2 per cent before Maran exited the airline