Delhi HC hears Sebi submissions in Maran-SpiceJet case

The matter has been listed again on 27 May for further hearing by Delhi High Court

The Delhi High Court heard submissions in the Kalanithi Maran–SpiceJet stock warrant issue on Wednesday.

Maran and his KAL Airways had filed a suit against SpiceJet in the high court earlier this year, demanding the conversion and transfer of 180 million redeemable stock warrants into equity shares, according to a 2014 resolution made by the firm.

Throughout the course of the proceedings, SpiceJet and its owner Ajay Singh maintained that the stock warrants in question cannot be converted or transferred until prior BSE and Securities and Exchange Board of India (Sebi) approvals are made.

At the last hearing, Sebi was given time to clarify its stand as to whether an issue could be made to Maran and KAL Airways, after BSE submitted that it could not do so alone according to Sebi regulations

In Wednesday’s hearing, Sebi, too, rejected the possibility of it making an issue in favour of Maran and KAL citing Section 9(2)(m) of the Securities Contract Regulation Act, 1956 and informed the court that as per the law only BSE could take such a step.

Commenting on what has become aregular feature in these hearings, the presiding Justice Manmohan Singh remarked,"He (BSE) is saying it is your responsibility, and you (SEBI) are saying it is his. How is this possible?"

The contentions made by SEBI led the counsel for Maran, Senior Advocate Kapil Sibal, to remark, "Then they (SpiceJet) have to secure us and we will go for arbitration." The statement was made in reference to the Rs 679 crore payment already tendered to Spicejet by Maran and KAL to secure the shares as per the 2014 resolution.

Sibal further stated, that as per the agreement the shares were supposed to be transferred at the then marketprice of Rs 16.20 per share but the current price was now well above Rs 80 per share making the SpiceJet liability correspondingly higher.

Sibal also sought an additional interim order from the court for non-dilution of shares by SpiceJet so as to prevent any third party interests to arise. The counsel for SpiceJet vehemently opposed this suggestion and claimed that shares, which are not part of the issue at hand, should not be encumbered under any circumstance.

After hearing the arguments advanced, the court extended an interim order in favour of Maran and KAL preventing SpiceJet from diluting its shares. The court further directed SpiceJet to file its reply to the proposal regarding return of the amounts already paid to it. The matter has been listed again on 27 May for further hearing.