SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh have challenged the order of a single judge of the Delhi High Court upholding the arbitral award in the dispute with Sun Group Chairman Kalanithi Maran and Kal Airways.
The case came up for hearing before a division bench of the Delhi High Court led by Justice Yashwant Varma on August 23 but it was deferred to September 15 as SpiceJet was not represented by any lawyer. However, the case was mentioned again before the judges rose for lunch, wherein the lawyers for SpiceJet sought a hearing for tomorrow. The case will now be heard on August 24.
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 non-issuance of compulsory redeemable preference shares.
Both challenges have been rejected by the Delhi High Court.
Execution proceedings
Maran had initiated proceedings before Justice Yogesh Khanna to execute the arbitral award. On July 24, the judge summoned Ajay Sing to appear in person after Maran and Kal Airways alleged that the low-cost airline had failed to file an affidavit of assets and liabilities.
On August 9, Justice Khanna also issued a notice on Maran's application seeking attachment of 50 percent of SpiceJet's daily revenues towards payment of Rs 393 crore that the low-cost airline owes him. Maran wanted the money to be paid every week.
SpiceJet in Supreme Court
On July 7 held that the arbitral award is executable as SpiceJet did not adhere to the timeline it had laid down in February to make certain payments to Maran.
In February 2023, the top court disposed of the case directing that SpiceJet’s Rs 270-crore bank guarantee be encashed and asked the airline to pay Rs 75 crore towards interest within three months.
The airline had challenged the Delhi High Court’s 2020 order asking it to deposit Rs 242 crore in six weeks. While the court had initially stayed the order, it later permitted Maran to encash Rs 250 crore bank guarantee and asked SpiceJet to pay him Rs 75 crore in three months.
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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