The Delhi High Court on May 17 set aside its earlier order upholding the arbitral award in favour of Kalanithi Maran and against low-cost airline SpiceJet, bringing in relief for the cash-strapped carrier.
A bench of justices Yashwant Varma and Ravinder Dudeja passed the order on a plea file by SpiceJet's chairman and managing Director (CMD) Ajay Singh and the airline against a single-judge order, which in July 2023 affirmed the award.
SpiceJet and Singh had sought to set aside the portion of the award which directed them to refund Rs 270 crore to Kal Airways and Maran. They also sought a waiver of 12 percent interest on warrants and setting aside of the 18 percent interest granted in the award.
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 and also 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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