The Delhi High Court ordered the cash strapped airline to deposit an additional amount of 243 crores within six weeks concerning the share transfer dispute with the former promoter Mr. Kalanithi Maran, who is the owner of the Sun Group.
The company`s net worth has eroded completely, and if the company fails to deposit the amount within the deadline, Maran has the right to seek status-quo on SpiceJet`s shareholding, resulting in the inability of the company to raise capital from the market by issuing fresh shares or through a stake sale.
According to the order, the Judgement Debtor, who in this case is SpiceJet and promoter Ajay Singh, is directed to deposit 242.93 crores as post-award interest sum within six weeks. In case the amount is not deposited, the decree-holder shall be at liberty to seek directions to maintain status-quo to the shareholding of SpiceJet and Ajay Singh.
The amount is the interest payable on the rupees 579 crores that the court asked SpiceJet to deposit as a part of the dispute. The airline deposited the entire amount through a bank guarantee of rupees 329 crores and deposit of rupees 250 crores. SpiceJet will find it difficult to comply with the order as the pandemic has affected the revenue flow. The net worth of the airline at March stood at rupees 1,580 crores and the cash balance stood at 42 crores, whereas the liabilities like lease rentals, payment to suppliers were accumulating.
The company is currently reviewing the order and will seek more time to deposit the amount.
The dispute arose over non-issuance of warrants in favor of Maran after the ownership was transferred to Mr. Ajay Singh who is the current controlling shareholder of SpiceJet. Maran sold his entire 58.46 percent stake which amounted to 350.4 million at a nominal price of 2 rupees in 2015.
Litigation started after Maran accused SpiceJet and Singh of breach of the agreement and not issuing him 189 million share warrants and preference shares, despite 579 crore rupees infusion made by him. In July 2018, an arbitration tribunal ruled in SpiceJet`s favor and rejected Maran`s claim, however, the tribunal has said Maran was entitled to a refund of 579 crore rupees.
