Delhi High Court clips SpiceJet’s wings, orders airline to pay 579 crore

The Delhi High Court yesterday dismissed an appeal filed by SpiceJet questioning the order of a single judge bench directing it to deposit 579 Crores in a suit filed by former owner Kalanithi Maran..While observing that the appeals were bereft of any merit, the Bench of Justices S Ravindra Bhat and Yogesh Khanna held,.“The absence of material to establish that it (Spicejet) would be irreparably prejudiced or that balance of convenience would be against it can only mean that it failed to substantiate its contentions..A contrary finding, that they would not be prejudiced in any manner, sans documentary materials on the record, but only based on press reports and interpretation of balance sheet for a given year available in the public domain, would be fraught with difficulty…”.However, the Court modified the single judge’s direction that the entire amount be deposited in 12 months, and allowed the airline to pay 250 crore in the form of cash deposit by August 31, 2017. The remaining 329 crore would be deposited through a bank guarantee by July 31, 2017..The Court gave the following reasons for the modification:.“This modification is essential not because the petitioners were unable to establish a strong prima facie case but because of the unpredictable nature of the likely injury that may be caused to the commercial operations of the company and the appellants, if the entire amounts were secured through deposit in court”..The share transfer dispute between Maran and Spicejet dates back to a 2015 sale purchase agreement, which leads to change in ownership of the budget carrier from Maran to co-founder Ajay Singh. According to the agreement, Maran had transferred his 58.46% stake in the airline. In return for the transfer, Maran and his Kal Airways were to receive stock warrants and Convertible Redeemable Preference Shares from Spicejet..After Spicejet failed to issue warrants or allot tranches of preference shares, Maran, who is also the Sun Group chief, filed the suit before the High Court to enforce the terms of the agreement..Senior Advocates Abhishek Manu Singhvi and Rajiv Nayyar appeared for the respondents..Read Judgment: