Kalanithi Maran files caveat against SpiceJet in Supreme Court

If the low cost airline decides to file an appeal in Supreme court now, it would be second round of litigation pertaining to the same case in the apex court.

Sun Group chairman Kalanithi Maran has filed a caveat in Supreme Court in anticipation of an appeal by SpiceJet against Delhi High Court's order refusing to stay the operation of the arbitral award in his favour.

A caveat is a pleading filed by a party to a litigation in the lower court, informing the court that the opposing party, who has not succeeded in the lower court may file a case against them. The court is to hear both the sides before passing any order in case a caveat is filed.

On August 24, 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.

On the same day, an execution court of the Delhi High Court ordered SpiceJet and its Chairman cum Managing Director (CMD) Ajay Singh  to pay Rs 100 crore to Maran by September 10 as bona fide subject to their rights and contention. The failure to do so could also lead to the court attaching the company's profits for the last quarter, the court orally warned.

Maran has filed a caveat since this order of the high court is appealable in Supreme Court. It may also be noted that as per law, if the operation of an arbitral award is stayed, the execution court cannot compel the SpiceJet to make payments to Maran.

Maran's caveat was filed on August 26 by his lawyers Karanjawala and co.

Previous round of litigation in Supreme Court:

If the low cost airline decides to file an appeal in Supreme court now, it would be second round of litigation pertaining to the same case in the apex 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.

These litigations emanate from an arbitral tribunal's July 2018 order which granted 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.