SpiceJet Ordered to Pay $6 Million to Former Promoter Maran Amid Legal Battle
In the latest development of the prolonged legal struggle between SpiceJet and its former promoter, Kalanithi Maran, the Delhi High Court has mandated the low-cost carrier to pay INR500 million (approximately USD6 million) to Maran and KAL Airways within a six-week timeframe. This ruling is part of a larger legal confrontation stemming from a failed share transfer deal with SpiceJet’s current promoter, Ajay Singh, which initially led to a 2018 award in Maran’s favor amounting to INR5.79 billion (USD69.7 million), plus accruing interest.
Despite the Delhi High Court’s mid-2023 refusal to overturn the original ruling, thereby upholding the debt obligation towards Maran, SpiceJet and Singh have faced challenges in fully satisfying the payment. As of early 2024, Maran’s legal team reported an outstanding balance of INR1.94 billion (USD23.3 million), which has since escalated to INR2.5 billion (USD30.1 million) due to additional accruals. Efforts by Maran to secure a garnishee order against SpiceJet’s bank accounts were denied by the court to prevent jeopardizing the airline’s financial stability. However, the court’s directive for a partial payment signifies a continued pressure on SpiceJet to settle its financial commitments amidst ongoing appeals, including one set for hearing on May 14, 2024, regarding the disputed interest charges.
The intricacies of the legal battle are compounded by the high interest rates applied to the overdue amounts—12% per annum on the due amount and 18% on overdue payments—highlighting the significant financial strain on SpiceJet as it navigates through these legal challenges.
In a separate development, SpiceJet has announced securing rights to operate Hajj flights from seven Indian cities, projecting an increase in revenue from these operations. The airline’s strategic expansion into Hajj flights underscores its efforts to diversify revenue streams and bolster its financial position amid the ongoing legal tussle. In 2023, SpiceJet reported substantial revenues from its Hajj operations and plans to continue this trend with the induction of wide-body aircraft dedicated to serving pilgrims, particularly emphasizing enhanced services from Srinagar.
This juxtaposition of legal challenges and strategic operational expansions reflects SpiceJet’s multifaceted approach to navigating its current complexities. As the carrier grapples with its legal obligations to Maran, its proactive steps towards enhancing its service offerings and financial health signal a resilient strategy aimed at securing its position in the competitive aviation market.