KAL Airways and Kalanithi Maran on Monday said they will seek more than ₹1,323 crore in damages from SpiceJet and its chief Ajay Singh as well as challenge the recent Delhi High Court order in the ongoing dispute between the two sides.
| Photo Credit: REUTERS

KAL Airways and Kalanithi Maran on Monday said they will seek more than ₹1,323 crore in damages from SpiceJet and its chief Ajay Singh as well as challenge the recent Delhi High Court order in the ongoing dispute between the two sides.

On May 17, a division Bench of the court set aside a single judge Bench order that had upheld an arbitral award asking SpiceJet and its promoter Ajay Singh to refund ₹579 crore plus interest to Mr. Maran.

The Bench allowed the appeals filed by Mr. Singh and SpiceJet challenging the single judge’s order, passed on July 31, 2023, and remanded the matter back to the court concerned to consider the petitions challenging the arbitral award afresh.

Against this backdrop, Mr. Maran and his firm KAL Airways have decided to challenge the ruling after consultation with their legal counsel.

The decree holders — KAL Airways and Mr. Maran — “believe that the aforesaid judgement is deeply flawed and warrants further scrutiny”.

“In parallel, they are also seeking damages in excess of ₹1,323 crore, as determined by FTI Consulting LLP, United Kingdom, a globally renowned firm that specialises in estimation of losses arising out of breach of contractual commitments,” KAL Airways said in a statement on Monday.

Further, it said the claim for damages had originally been presented by KAL Airways and Mr. Maran before the arbitral tribunal and “has always remained an integral part of their quest for justice”.

By pursuing both the challenge to the Delhi High Court judgement and the claim for damages, the decree holders hope to secure a just and equitable resolution to the contentious dispute, the statement said.

The dispute arose due to a breach of trust by SpiceJet and has caused “enormous hardship to both KAL Airways and Kalanithi Maran for more than a decade,” it added.

According to the statement, they will pursue the execution of the arbitral award, seeking a refund of the pending dues amounting to ₹353.50 crore.

“This action is also in full compliance with, and supported by, the orders dated February 13, 2023, and July 7, 2023, passed by the Hon’ble Supreme Court directing that the award in favour of the decree holders is executed in its entirety,” it said.

On May 22, SpiceJet said it will seek a refund of ₹450 crore out of the total ₹730 crore paid to the airline’s former promoter Mr. Maran and KAL Airways following the Delhi High Court ruling.

The case dates back to early 2015, when Mr. Singh, who owned the airline earlier, bought it back from Mr. Maran after it was grounded for months due to resource crunch.

As part of the agreement, Mr. Maran and KAL Airways had claimed to have paid SpiceJet ₹679 crore for issuing warrants and preference shares.

However, Mr. Maran approached the Delhi High Court in 2017, alleging SpiceJet had not issued convertible warrants and preference shares nor returned the money.

A reduction of 15% would mean around 1,350 people will lose their jobs in SpiceJet.
| Photo Credit: PTI

“Crisis-hit SpiceJet plans to hand out pink slips to at least 1,000 employees in the coming days as the airline works to significantly reduce costs and streamline operations of its depleted aircraft fleet,” officials said on February 12.

Faced with financial woes, legal battles and other headwinds, the no-frills carrier might ask more staff to leave as there is excess manpower now compared to the number of planes in service. A final decision on the quantum of layoffs is expected this week, one of the officials in the know said.

“The airline has around 9,000 employees and is now looking at reducing the strength by 10-15%,” the official said, adding that layoffs are necessary to reduce the overall costs and annual savings could be up to ₹100 crore. A reduction of 15% would mean around 1,350 people will lose their jobs.

The second official in the know said that layoffs are expected across departments and the final list is being prepared. “People from the management and consultancy are working on chalking out the contours of letting staff leave and all the departments have been asked to give their inputs,” the official added. There was no official comment from SpiceJet on the proposed job cuts.

The second official explained that the airline has stopped operations on certain RCS (Regional Connectivity Scheme) routes and at those stations, there is excess manpower, especially staff with lower salaries. “Relocating such people will be a challenge,” the official noted.

Currently, SpiceJet has a fleet of more 30 aircraft apart from 10 planes that are on wet lease. During a meeting with the airline’s senior officials last month, SpiceJet Chairman and Managing Director Ajay Singh emphasised the importance of judicious spending and that he will personally oversee all major expenditures.

The carrier will prioritise fleet upgrades, enhance on-time performance and cost-cutting measures will be implemented to streamline operations, according to an internal note last month.

SpiceJet, which has undergone multiple ownership changes since inception and is currently helmed by Ajay Singh, is in the process of raising funds from various investors.

On January 26, the carrier announced that it has received ₹744 crore as the first tranche of the total ₹2,250 crore proposed to be raised through the issuance of securities on a preferential basis. There were reports that there has been a delay in raising the requisite funds.

The airline has also availed funds worth around ₹1,000 crore under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and Singh has committed to infuse ₹500 crore.

In recent times, SpiceJet also witnessed lessors taking legal recourse to take back their leased aircraft due to non-payment of dues.

India is one of the world’s fastest growing civil aviation markets and the domestic air traffic is on an upward trajectory. However, SpiceJet has been struggling for sometime now. In 2023, the carrier flew 83.90 lakh passengers and had a domestic market share of 5.5%.