Delhi High Court on July 31, refused to set aside the arbitral award in favour of Kalanithi Maran and against low-cost airline SpiceJet, making way for Maran to press for enforcement of award.
Spicejet and the CMD of the airline, Ajay Singh had sought for setting 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 Kalanithi Maran also requested to invalidate the portion of the award that included the interest on the amount of Rs 270 crore for the non-issuance of compulsory redeemable preference shares.
Both challenges have been rejected by the Delhi High Court.
The execution proceeding against the award is pending before another bench of the Delhi High Court. It is likely to come up for a hearing on September 5.
The developments in the case come after 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 asking the airline to pay Rs 75 crore towards interest within three months.
Maran was represented by senior advocate Maninder Singh, who was briefed by Nandini Gore, senior partner at law firm Karanjawala and Co.
Arbitral award:
In February 2015, Maran and KAL Airways, his investment vehicle, transferred their 58.46 percent in SpiceJet to Ajay Singh, the current Chairman and Managing Director (CMD). Singh, a co-founder of SpiceJet, 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 Ajay 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 sum of 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 fails to adhere to this timeline, Maran is entitled to an interest of 18 percent.
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