In a relief to budget carrier SpiceJet, the Supreme Court on Tuesday allowed the airline to approach the Delhi High Court again for reconsideration of its plea against the ₹144.5 crore deposit order in its long-running arbitration dispute with Kalanithi Maran and KAL Airways.
The relief came after the airline warned that it could shut down if forced to make an immediate payment without the proposed ₹5,000 crore government support package for airlines.
A bench of Justice P.S. Narasimha and Justice Alok Aradhe asked the Delhi High Court to consider subsequent developments, including the Centre’s support measures and proposed relief package for airlines affected by the West Asia crisis.
Referring to the government support measures, the bench observed that the Delhi High Court may consider the airline’s plea in light of “the policy decision relating to emergency credit line guarantees” and the prevailing situation.
Deposit dispute
During the hearing, senior advocate Mukul Rohatgi, appearing for SpiceJet, sought around three months’ time for payment, arguing that the timeline aligned with the government support package announced on 5 May for the aviation sector, which he said was expected to become operational around July.
Rohatgi submitted that the Centre had announced emergency credit support measures for the aviation sector, including a proposed ₹5,000 crore package for airlines, and sought breathing space until those funds became available.
He told the court that the airline currently had little liquidity and nothing substantial to offer except a one-acre commercial property in Gurugram’s Udyog Vihar as security. According to him, the property was unencumbered and was being monetized, though an immediate sale was not feasible.
According to Rohatgi, if relief was not granted, the airline risked closure.
“I am saying if the government is giving me a bailout, it takes around 12 weeks for the government support to come. The bailout was announced on 5 May and it will probably happen by 10 July. Otherwise, the airline will close tomorrow. We have thousands of employees,” Rohatgi told the court.
Rohatgi further submitted that SpiceJet had already paid about ₹729 crore out of the total arbitral award amount of approximately ₹873 crore, including interest, meaning nearly 83% of the dues had already been discharged and only ₹144.5 crore remained outstanding.
He argued that SpiceJet, now the “smallest of the three airlines”, had been severely affected by disruptions caused by the West Asia crisis and rising operational costs.
Maran pushback
Opposing the plea, senior advocate Jayant Mehta, appearing for KAL Airways and Kalanithi Maran, argued that SpiceJet had repeatedly delayed compliance despite several court orders and opportunities.
Maran’s side submitted that the amount had become payable in February 2023 and that the airline had consistently relied on financial distress arguments for years. It argued that the latest plea was another attempt to delay payment.
KAL Airways also contended that the ₹144.5 crore represented only the admitted outstanding amount and not the total liability.
Origins of dispute
As part of the transaction, Maran infused around ₹679 crore into SpiceJet through convertible warrants and preference shares. Maran later alleged that those instruments were not issued by the new management, leading to arbitration proceedings.
In July 2018, the arbitral tribunal directed SpiceJet to refund ₹579 crore along with interest.
The matter has since gone through multiple rounds of litigation before the Delhi High Court and Supreme Court.
In February 2023, the Supreme Court directed encashment of a ₹270 crore bank guarantee and ordered SpiceJet to pay ₹75 crore towards interest, warning that failure to comply would render the arbitral award fully executable.
In January this year, the Delhi High Court recorded that ₹194.51 crore remained outstanding under earlier directions. After adjusting ₹50 crore already deposited, the court directed SpiceJet and promoter Ajay Singh to deposit the remaining ₹144.5 crore, triggering the latest round of litigation over the deposit order.
Stay updated with the latest Trending, India , World and US news.
