spicejet: Spicejet offers Rs 600 crore to settle with KAL Airlines


NEW DELHI: Low-cost carrier Spicejet on Thursday offered to pay a total of Rs 600 crore to fully and finally settle its disputes with KAL Airlines and Kalanithi Maran, upping its offer by 25 crore from the principal amount of Rs 578 crore, which KAL claimed to have increased with interest to Rs 1,000 crore.
A Supreme Court bench of Chief Justice N V Ramana and Justices A S Bopanna and Hima Kohli told Spicejet counsel Mukul Rohatgi that the beleaguered airlines’ “credentials are not great” while reminding it of the case relating to dispute over defaulting in payment of $24 million to Credit Suisse. Rohatgi promptly told the court that the payment dispute with Credit Suisse is getting settled and that Spicejet is eager to settle with KAL Airlines and Kalanithi Maran.
Rohatgi said against a principal amount of Rs 578 crore, Spicejet has already paid Rs 308 crore in cash and has given a bank guarantee worth Rs 270 crore, fully covering the defaulted amount. “If KAL Airlines agrees to the settlement, then Spicejet would withdraw the bank guarantee and give Rs 270 crore in cash. The award of 18% interest is illegal and is subject matter of challenge before the High Court. IF they intend to waive off the interest component, we are ready to settle the principal amount immediately.”
Appearing for KAL airlines, senior advocate Maninder Singh said the decretal amount is Rs 1,000 crore and his clients are not asking for a penny more. If Spicejet is allowed to get away with paying Rs 578 crore, which is the principal amount, then the decree awarding Rs 1,000 crore becomes a paper decree, Singh said.
Singh also alleged that the low-cost carrier is apparently shifting to cargo business and winding up its operations, in which case the creditors will get nothing. When the CJI-led bench chided Spicejet of having a track record of “not paying for the services taken from others”, Rohatgi upped the offer to Rs 600 crores instead of Rs 575 crore. SC asked Singh to take instructions from his clients on the Spiecejet’s fresh offer and listed the matter for further hearing on February 14.
On January 28, the SC had slammed SpiceJet, facing a winding up process initiated by Credit Suisse AG for defaulting in payment of $24 million, for mismanaging its finances and warned that if it was not serious in paying up its dues, it should be declared insolvent. “”Do you want to run or close shop,” the SC had asked.
Finding the writing on the wall, senior advocate Harish Salve had sought three weeks’ time from a bench headed by CJI Ramana to “work out something” to avoid the winding up process.
For Credit Suisse, senior advocate K V Vishwanathan told the court that SpiceJet must make a serious offer. Rohatgi on Thursday said Spicejet is on the verge of settling the dispute with Credit Suisse.


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