Budget carrier SpiceJet today claimed in Delhi High Court that its decision directing the airline to deposit Rs. 579 crore within 12 months in connection with a share transfer dispute with its previous owner Kalanithi Maran was “erroneous”.
The submission was made before a bench of justices Indira Banerjee and V.K. Rao during the hearing of the airline’s appeal contending that the dispute has to be decided by arbitration and the single judge of the high court had exceeded his jurisdiction.
The single judge’s decision had come on a plea of Sun Group chief Kalanithi Maran and his Kal Airways for issuance of stock warrants in SpiceJet to them, as per a sale-purchase agreement (SPA) of 2015 that had led to the transfer of ownership of the budget carrier to its co-founder Ajay Singh.
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Senior advocate C.A. Sundaram, appearing for the air carrier, said “this matter needs to be decided in arbitration. The final decree cannot be passed by the court. It can only be done by arbitrator”.
“How can a court pass an interim order when it cannot pass the final order,” Mr. Sundaram argued and added that “the approach taken by the single judge was erroneous. He exceeded his jurisdiction. There is an error committed by the single judge.”
The arguments, which remained inconclusive, will resume tomorrow.
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Mr. Maran and his airline had alleged before the single judge that despite giving Rs. 579 crore to SpiceJet, the carrier had failed to issue them the warrants or allot tranche 1 and 2 of Convertible Redeemable Preference Shares and that the amount was not utilised for paying statutory dues due to which they were also facing prosecution.
Apart from ordering deposit of the amount in the court, Justice Manmohan Singh had earlier asked Spicejet and Mr. Maran to appoint an arbitral tribunal to decide the share transfer dispute between them in a year.
The amount was to be deposited in five instalments with the first one in August this year, the court had said.
Market regulator SEBI had earlier expressed its inability before the single judge to approve the board resolution passed by SpiceJet for issue of warrants in favour of Mr. Maran and his Kal Airways.
The board resolution was passed on the court’s direction.
Under the sale and purchase agreement (SPA), Mr. Maran and Kal Airways had transferred their entire 350,428,758 equity shares (58.46 per cent stake) in the airline to Ajay Singh.
According to the SPA, Mr. Maran and Kal were to receive the redeemable warrants in return for around Rs. 679 crore that they were to give to the airline towards operating costs and debt payment, Mr. Maran had said in his plea.
SpiceJet had earlier told the court that the change of ownership was effected as a rehabilitative measure to address the liability of Rs. 2,000 crore incurred by the airline when it was under the management of Mr. Maran.
It had also claimed that every penny had been utilised towards operations and discharge of liabilities.