SpiceJet Faces Allegations of Ignoring Court Order in Payment Dispute with Former Owner

SpiceJet and its Managing Director, Ajay Singh, are under scrutiny for allegedly failing to adhere to a court directive to pay INR500 million (USD6 million) to the airline’s former owner, Kalanithi Maran, and his company, KAL Airways. The accusation of “wilful disobedience” came to light during a hearing on March 28 at the Delhi High Court, highlighting ongoing legal battles stemming from SpiceJet’s ownership transfer in 2015.

The root of this legal entanglement dates back to the acquisition of a majority stake in SpiceJet by Ajay Singh from Maran in 2015, a transaction that failed to deliver on certain agreed-upon warrants and preference shares to Maran. Consequently, Maran was awarded INR5.79 billion (USD69.4 million) plus interest in 2018, a decision that SpiceJet and Singh have since contested, leading to delayed payments and further court interventions.

By mid-2023, after factoring in partial payments and accumulated interest, Maran’s outstanding claim amounted to approximately INR3.8 billion (USD45.6 million). Despite a court order on February 5 mandating a payment of INR500 million by March 18, SpiceJet and Singh reportedly did not comply within the stipulated timeframe, leading to accusations of deliberate non-compliance. SpiceJet’s counsel later revealed that a partial payment of INR250 million was made on March 27, asserting there was no intentional disregard of the court’s directives.

As the dispute continues, Maran seeks not only to charge Ajay Singh with contempt but also to gain authorization to seize SpiceJet’s accounts at Yes Bank. Further exacerbating tensions, Maran’s legal representation criticized SpiceJet’s financial decisions, including recent capital raising efforts and potential acquisitions, urging the airline to prioritize settling existing liabilities.

With SpiceJet and Singh still owing Maran a substantial sum, primarily accrued interest, the conflict underscores broader issues of financial management and legal compliance within the airline industry. The case is set to return to the Delhi High Court on April 25, 2024, as stakeholders closely watch the unfolding legal drama and its implications for one of India’s leading low-cost carriers.