Delhi High Court on Tuesday passed an interim order paving the way for issuance of stock warrants in Spicejet to Kalanithi Maran and his Kal Airways Pvt Ltd (KAL) saying there was no impediment before BSE in considering their joint representation seeking approval of the warrant issue.
As per the plea of Sun group head Kalanithi Maran, he and KAL were to be issued stock warrants in Spicejet by the airline under a 2015 sale purchase agreement (SPA) which led to change in ownership of the budget carrier.
Maran had sought that the warrants be issued in terms of an application made to the Bombay Stock Exchange (BSE) on September 18, 2014 and which had been approved by company's board on September 24, 2014.
In an interim order, Justice Manmohan Singh said, "I am of the view that at present, there is no impediment if BSE may consider application dated September 18, 2014, in light of change of circumstances, because of the reason that earlier respondent 1 (Spicejet) did not provide clarification and now since clarification is available coupled with subsequent events, application dated September 18, 2014 can be considered by BSE..."
"Accordingly, as agreed, parties will file fresh resolution along with letter of authorization before the BSE within three days from today. In case of any further queries or any clarification required by BSE, the parties are ready to cooperate with each other . In view of the same, BSE will decide the application within two weeks from date of submitting the requisite paper," the court said.
The court also gave various suggestions including one to Maran and KAL to release Rs 100 crore to Spicejet as per the SPA. It also suggested that Spicejet's board "shall pass a resolution jointly authorising representative of KAL/Maran and the company to represent and pursue application with BSE/SEBI seeking approval for issue of warrants".
"Thereafter, company (Spicejet) shall pass board resolution for issuing Convertible Redeemable Preference Shares (CRPS) in terms of provisions of SPA," the court also suggested.
The court suggested that after approval by the BSE/SEBI, warrants can be issued without delay on terms as approved in the September 24, 2014 annual general meeting of Spicejet. Under the 2015 SPA, Maran and KAL transferred their entire 350,428,758 equity shares (58.46% stake) in the airline, to Ajay Singh.
According to the deal, they were to receive the redeemable warrants in return for around Rs 679 crore that they were to give to the airline towards operating costs and debt payment, the petition has claimed.
Maran and his airline, KAL, have alleged in their plea that despite giving around Rs 579 crore to Spicejet, the carrier failed to issue them the warrants or allot them tranche 1 and 2 of CRPS shares and the amount was not utilised for paying statutory dues due to which they were also facing prosecution.
Spicejet, refuting these allegations, had claimed that the warrants can be issued only after approval is received from BSE. It had also said there was no fear of transferring shares to a third party or to Maran as the shares have not yet been issued by the company.
It had further said the change of ownership was effected as a rehabilitative measure to address the liability of Rs 2,000 crore incurred by the airline while under the management of Maran. Spicejet had also claimed that every penny has been utilised towards operations and discharge of liabilities.
In an statement, the airline said, "In accordance with court proceedings SpiceJet will pass a resolution within three days authorizing joint representatives to appear before BSE / SEBI to reconsider its earlier application regarding issue of warrants."
