KAL Airways and Kalanithi Maran on Monday said they will seek over Rs 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 in the Supreme Court.
On May 17, a division bench of the Delhi HC set aside a single judge order that had upheld an arbitral award asking SpiceJet and its promoter Ajay Singh to refund Rs 579 crore plus interest to Maran.
The court however sent it back to the single judge to rehear the case against, according to the two judge bench the single judge had not passed a reasoned order. The court however made it clear that any observations in the judgment on the merits of the case need to be disregarded. As a result of this judgment, the litigation is likely to be prolonged.
Against this backdrop, Maran and his firm KAL Airways have decided to challenge the ruling after consultation with their legal counsel. The decree holders — KAL Airways and Maran — "believe that the aforesaid judgement is deeply flawed and warrants further scrutiny”.
”In parallel, they are also seeking damages in excess of Rs 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 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 Rs 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 Rs 450 crore out of the total Rs 730 crore paid to the airline’s former promoter Maran and KAL Airways following the Delhi High Court ruling.
What is the dispute about?
In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent stake in SpiceJet to Singh. A co-founder of SpiceJet, Singh took on the airline’s liabilities of around Rs 1,500 crore.
As part of the agreement, Maran and KAL Airways said they paid SpiceJet Rs 679 crore for issuing warrants and preference shares. However, Maran alleged that the warrants and preference shares were not allotted and initiated arbitration proceedings against SpiceJet and Singh. In July 2018, an arbitration panel rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore plus interest.
SpiceJet was permitted to furnish a bank guarantee for Rs 329 crore and make a cash deposit of the remaining Rs 250 crore.
Thereafter, the award was challenged in the courts.
The shares of SpiceJet was down 3.76% to trade at Rs58.16 at 2.40 pm.
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