SpiceJet to seek ₹450 cr refund from Maran after HC ruling; stock up 3%

After the Delhi High Court's ruling on May 17, 2024, SpiceJet on Wednesday said it will seek a refund of ₹450 crore out of the ₹730 crore it has previously paid to former promoter Kalanithi Maran and his firm, KAL Airways.

The budget airline says the division bench of the Delhi high court ruled on May 17 in favour of SpiceJet and its promoter, Ajay Singh, in the long-standing share transfer case against former promoter Kalanithi Maran and his firm, KAL Airways.

"The HC ruling overturned a previous decision by a single-judge bench, positioning SpiceJet to claim a substantial refund based on legal advice," the company says in a statement.

SpiceJet says it has paid a total of ₹730 crore, comprising ₹580 crore in principal along with an additional ₹150 crore towards interest, to Maran and KAL Airways. The company claims with the setting aside of the impugned order, it is set to receive a "refund of INR 450 crore".

The appeal by SpiceJet and Ajay Singh challenged several critical issues related to the award of refund and the justification of interest in the case. "The Delhi HC division bench found substantial merit in these challenges, noting that they were not adequately addressed in the previous order dated July 31, 2023," says SpiceJet.

In its ruling, claims SpiceJet, the division bench held that the "single judge erred in dismissing the Section 34 petitions of Ajay Singh and SpiceJet without due consideration of the claims of patent illegality and the order of refund passed against SpiceJet despite admitted breaches on the part of KAL Airways and Kalanithi Maran".

The court, it says, also noted that interest amounting to penal interest had been charged despite SpiceJet not being in any breach of the Share Purchase Agreement.

“These facts not being considered by the single judge, the appeals of Ajay Singh and SpiceJet have been allowed, and the impugned judgment dated July 31, 2023, has been set aside.”

Shares of SpiceJet opened flat at ₹61 and surged to an intra-day high of ₹63.25, up 3.1%, on the BSE today. The scrip is currently trading 13.6% down compared to the 52-week high of ₹77.50 touched on February 5, 2024. At the current share price, the m-cap of SpiceJet stands at ₹4,907.25 crore. The scrip surged 8.47% in the past week, and 1.18% in the past month. On a six-month, year-to-date and one-year basis, the scrip has risen 42.20%, 3.23%, and 123.01%, respectively.

In March, SpiceJet also signed a settlement agreement with Export Development Canada (EDC) to clear liabilities worth ₹755 crore or $90.8 million in a bid to revitalise its balance sheet. The liabilities stemmed from a loan acquired by the airline in 2011 for the procurement of 15 aircraft. SpiceJet is yet to report Q3 and Q4 FY24 financial results. Its FY23 loss stood at ₹1,503 crore while revenue came in at ₹8,868 crore.