SC directs SpiceJet to pay entire arbitral amount to Maran; stock dips 3%

The SpiceJet shares dipped 3% today amid the Supreme Court order, which directed the budget airline to pay the entire arbitral amount worth ₹380 crore to its former promoter Kalanithi Maran, Sun Group chairman and founder, in the 2018 arbitration award case.

While refusing to grant any extension to SpiceJet to pay the said amount, the SC reprimanded the Ajay Singh-led budget carrier for failing to pay ₹75 crore as per its earlier direction.

Today's apex court order follows its February 13 direction to the airline to pay ₹75 crore against the total claim worth ₹362.49 crore by Maran within three months, on which the airline defaulted.

In May, Maran moved the Delhi High Court, stating that Spicejet had failed to comply with the SC order, following which the HC ordered the airline to pay the entire amount i.e. ₹380 crore to the airline's former promoter.

The court had also asked SpiceJet to deposit the entire outstanding amount and file an affidavit of assets in four weeks. But SpiceJet said it was in talks with Maran and his firm KAL Airways for a comprehensive settlement.

The airline stock that opened the gap up at ₹30.49 traded flat today and soon fell to an intra-day low of ₹29.60 apiece. At the current share price of ₹29.57, the airline's market cap stands at ₹1,781.46 crore. The SpiceJet share surged 6.75% in the past week, while it rose 10.50% in the past month. In the six-month and the year-to-date period, the stock has fallen 21.20% and 24.24%, respectively.

The no-frills airline has witnessed a consistent drop in its market share over the past few months. The Gurugram-based carrier's market share dropped to 5.4% in May from 6.4% in March, according to data released by aviation regulator DGCA (Directorate General of Civil Aviation).

The dispute between the two parties dates back to 2015 when Kalanithi Maran first approached Ajay Singh, SpiceJet’s current chairman, and managing director, who had been associated with the airline previously. The ownership of the airline was transferred to Singh for ₹2.

At the time of transfer, the company had debt and liabilities outstanding of over ₹3,500 crore with immediate payables of around ₹2,200 crore, and its Boeing fleet was reduced from 41 to 17 aircraft.

To keep the debt-laden carrier afloat, Singh asked the Marans to put in a substantial amount of money to clear up dues including tax liabilities, and also provided some liquidity to keep the company running. It is this ₹578 crore — invested by the Sun Group at the time — which is now the main bone of contention.

Separately, the Marans have also filed for damages in the Delhi High Court and claim that Singh owes them at least ₹2,400 crore in damages - based on the calculations by an external firm that has expertise on the matter - since if the airline's warrants/shares had been issued as promised to them, they would have sold them when the share value was at its peak and recovered the money they invested in the business.