The Supreme Court on Tuesday directed SpiceJet to approach the Delhi High Court seeking an extension of the deadline to deposit Rs 144 crore in connection with a long-standing legal dispute with media baron Kalanithi Maran and Kal Airways.
A bench comprising Justices Vikram Nath and P.B. Pardiwala refused to entertain the airline's plea directly, stating that the matter should first be heard by the High Court, which had originally set the payment timeline. The court observed that the High Court was better placed to consider the airline's financial constraints and operational challenges.
Background of the Dispute
The legal battle between SpiceJet and the Maran-led Kal Airways dates back to 2015, when the airline failed to redeem warrants worth Rs 679 crore. The dispute escalated, leading to arbitration proceedings. In 2018, an arbitral tribunal awarded Rs 144 crore in favor of Maran and Kal Airways, which was later upheld by the Delhi High Court.
The airline has been seeking more time to comply with the payment order, citing severe financial distress exacerbated by the COVID-19 pandemic and rising fuel costs. SpiceJet's counsel argued that the company is making efforts to raise funds but needs additional time to arrange the amount.
Supreme Court's Stance
The Supreme Court, however, maintained that the High Court had already granted several extensions and that the airline must now justify its inability to pay. The bench directed SpiceJet to file an application before the Delhi High Court within a week, which will consider the request for an extension on its merits.
Senior advocate appearing for Kal Airways opposed the plea, stating that the airline has been delaying the payment deliberately. The court, however, did not pass any interim order and left the matter to the High Court's discretion.
Impact on SpiceJet Operations
The ongoing legal tussle has added to SpiceJet's financial woes, as the airline has been struggling with mounting debts and operational losses. The carrier has been exploring various options, including equity infusion and asset monetization, to stay afloat. Industry experts believe that a prolonged legal battle could further strain the airline's liquidity position.
SpiceJet shares closed 1.2% lower on the Bombay Stock Exchange on Tuesday, reflecting investor concerns over the legal outcome. The airline's market capitalization has declined by over 30% in the past year amid intense competition and rising input costs.
Way Forward
With the Supreme Court's directive, all eyes are now on the Delhi High Court, which will hear SpiceJet's plea for an extension. The airline is expected to present a concrete repayment plan to convince the court. Meanwhile, Maran and Kal Airways have maintained that they are entitled to the amount as per the arbitration award and have opposed any further delays.
The case is likely to be listed before the Delhi High Court next week, where SpiceJet will seek additional time to deposit the amount. The outcome will have significant implications for the airline's financial stability and its ability to continue operations without disruption.
