A two-judge bench of the Delhi High Court on October 31 deferred the hearing in low-cost airline SpiceJet's challenge to a single judge of the court upholding the validity of arbitral award in favour of media baron Kalanithi Maran to November.
The court is yet to assign a date for the next hearing, but has indicated in the courtroom that the case is likely to come up for hearing next month.
"The success of this case is very important for the airline's survival," the SpiceJet lawyer said. The adjournment was granted on a request by Maran's lawyers.
SpiceJet told the court that their liability to Maran was Rs 194 crore after it paid Rs 100 crore to the media tycoon in September. However, Maran contested this claim and told the court that SpiceJet still owes them over Rs 350 crore. Maran's lawyer asked the court to defer the hearing to the third week of November, but SpiceJet objected to it and told the court that the outcome of the case was very important for the airline.
The case file
In the ongoing case, both Maran and SpiceJet filed Section 34 before a single judge of the Delhi High Court. Maran also simultaneously filed a petition to execute the arbitral award.
SpiceJet cofounder and chief Ajay Singh had sought to set aside the portion of the award that 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 the court 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.
On July 31, a single judge of the Delhi High Court dismissed both these petitions and upheld the validity of the arbitral award. However, SpiceJet and Ajay Singh challenged this order before a two-judge bench of the high court.
On August 24, a division bench of the Delhi High Court refused to stay the order and dismissed SpiceJet’s application for an interim stay. The main case will now come up for hearing on October 31.
The arbitral award
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.
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 through the return of money in terms of a Share Purchase Agreement. If the company failed to adhere to the timeline, Maran was entitled to interest of 18 percent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
