A division bench of the Delhi High Court dismissed SpiceJet's plea seeking a stay on the arbitral award. SpiceJet’s lawyers submitted before the court that they would pay Rs 75 crore immediately and that the airline employs 10,000 people but the bench denied any relief.
Ajay Singh, who was summoned by the execution bench of Delhi HC, was present in the court during the hearing.
During the hearing today, senior advocate Amit Sibal who appeared for Singh and SpiceJet argued that the single judge failed to consider SpiceJet's challenge for the payment of Rs 270 crore towards compulsory redeemable preference share and the exorbitant 18 percent interest imposed on them. He further urged the court to stay the execution proceedings before the single judge.
The court, however, made it clear that they will not go into execution of the award as the Supreme Court in its July 7 order made it clear that the award is executable. The court thus dismissed the application for a stay of execution proceedings.
While the application for stay stands rejected by the division bench, the main appeal will be heard on October 31.
On July 31, the Delhi High Court upheld the validity of the arbitral award against SpiceJet.
SpiceJet and Ajay Singh had sought to set aside the portion of the award which directed them to refund Rs 270 crore to Kal Airways and Kalanithi Maran. Additionally, they sought to waive the 12 percent interest on warrants and set aside the 18 percent interest granted in the award.
Kal Airways and Maran also requested to invalidate the portion of the award that included interest on the amount of Rs 270 crore for the non-issuance of compulsory redeemable preference shares.
Both requests were rejected.
SpiceJet in Supreme Court:
The airline had challenged Delhi HC's 2020 order asking it to deposit Rs. 242 crore in six weeks. While the court had initially stayed the HC order, it eventually permitted Maran to encash Rs. 250 crore bank guarantee and asked SpiceJet to pay Maran Rs. 75 crore in three months.
However, SpiceJet did not comply with the apex court's order and sought for an extension of time. On July 7, SC juked its application and permitted the arbitral award to be executed.
The casefile
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.
According to the award, SpiceJet had to pay Rs 308 crore in cash together with 12 percent interest for 30 months, as well as Rs 270 crore, either in the form of compulsory redeemable preference shares or by the return of money in terms of a Share Purchase Agreement. If the company failed to adhere to the timeline, Maran was entitled to an interest of 18 percent.
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