The bench had initially said that Rs 250 crore in cash and Rs 229 crore as bank guarantee should be deposited.
New Delhi: The Delhi High Court today directed budget carrier SpiceJet to deposit Rs 579 crore in connection with a share transfer dispute with its previous owner Kalanithi Maran, but provided it some relief by allowing it to deposit the amount in two parts.
A bench of Justices S Ravindra Bhat and Yogesh Khanna said "there is nothing worthwhile" in the airline's plea to show its finances were precarious or that its cash position was so stretched that it cannot comply with a single judge order to deposit the amount.
"There is neither reference to any figure or amount, nor reliance on any balance sheet, nor even the income and expenditure statement of the company, to say that compliance with the impugned order would irreparably injure it.
"The court notices that the nearly 18 month pendency of this appeal, and the non-compliance with the impugned order (of single judge), has aggrandized the appellant (SpiceJet), which was to have the benefit of the amounts.
"If there were any difficulties, this interregnum period would have helped it considerably tide over its affairs and certainly afforded time to organise it better and in a more orderly fashion to comply with the order," the bench said, while dismissing the appeals of the airline and its co-founder Ajay Singh.
The court, however, said it was "essential" to modify the single judge July 2016 order due to the "unpredictable nature of likely injury that may be caused to the commercial operations of the company if entire amount is secured through a deposit".
It said that part of the amount can be secured by a cash deposit of Rs 250 crore and the balance by a bank guarantee of Rs 329 crore. The bench had initially said that Rs 250 crore in cash and Rs 229 crore as bank guarantee should be deposited, which was Rs 100 crore short of the total amount of Rs 579 crore. After the lawyers in the case pointed out the error, the bench said it will "take care of it".
Thereafter, the figures were corrected in the written judgement. Reacting to the verdict of the high court, SpiceJet officials said on condition of anonymity that there will be no dilution of stake to Marans.
They said the order "gets rid of the warrants issue and will help the company focus on the long term strategy and conduct its business normally without any constraints".
The officials also claimed the company has the ability to generate these funds and added that a final decision will be taken by the arbitrator. SpiceJet and Singh had challenged the single judge's July last year's interim order saying the court did not have the jurisdiction.
The single judge's order had come on a civil suit by Sun Group chief Kalanithi Maran and his Kal Airways. In their suit, Maran and his airline company had sought issuance of stock warrants in SpiceJet to them as per a sale purchase agreement (SPA) of 2015 which had led to the transfer of ownership of the budget carrier to Ajay Singh.
Maran and Kal Airways 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 one and two 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 that the amount be deposited in the court, the single judge had also asked Spicejet and 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 2016, 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 Maran and his Kal Airways.
The board resolution was passed on the court's direction. Under the SPA, 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, Maran and Kal were to receive the redeemable warrants in return for the amount they were to give to the airline towards operating costs and debt payment, 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 Maran. It had also claimed that every penny had been utilised towards operations and discharge of liabilities.