 "Spicejet")
The Delhi High Court on Friday overturned an order of a single-judge bench, which had upheld an arbitration panel's direction asking SpiceJet to refund over Rs 270 crore to its former promoter Kalanithi Maran.
A division bench of justices Yashwant Varma and Ravinder Dudeja, while allowing the appeal filed by low cost carrier’s Chairman and Managing Director (CMD) Ajay Singh, said, “Appeal stands allowed. Consequently, the July 31, 2023 order is set aside."
Singh had challenged the earlier order that had upheld the arbitral award in favour of Maran and sought to set aside the portion of the award that directed them to refund Rs 270 crore to Kal Airways and Maran.
He also challenged 18 per cent interest which the tribunal had directed SpiceJet to pay and waiver of 12 per cent interest on warrants.
On July 31, the Delhi High Court single judge bench had refused to set aside the arbitral award in favour of Kalanithi Maran and against SpiceJet, paving the way for Maran to press for enforcement of the award.
“There is nothing in the impugned award to suggest that it suffers from patent illegality and the findings therein are perverse and will shock the conscience of this court. In the instant case, the petitioners have not been able to prove that the impugned Arbitral Award is patently illegal, against public policy of India or fundamental policy of law and thus have failed to make out a case for the award to be set aside,” the court had said in July.
SpiceJet then filed an appeal before the division bench which gave it a breather.
Kal Airways and Maran had moved the Delhi High Court on August 9, 2023, seeking 50 per cent of the daily revenue collection of low-cost carrier SpiceJet to be paid to them on a weekly basis. The amount due from SpiceJet to Maran as of August 3 last year stood at Rs 393 crore.
A detailed order is awaited.
Background
In February 2015, Maran and Kal Airways transferred their 58.46 per cent stake in SpiceJet to Singh. Singh took on the airline’s liabilities of around Rs 1,500 crore.
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Maran and Kal Airways reported that they paid SpiceJet Rs 679 crore for the issuance of warrants and preference shares. However, Maran claimed that these warrants and preference shares were not allotted, leading him to initiate arbitration proceedings against SpiceJet and Singh.
In July 2018, the arbitration panel rejected Maran’s claim for Rs 1,323 crore in damages for the non-issuance of warrants. Instead, the panel awarded him a refund of Rs 579 crore plus interest.
SpiceJet was allowed to provide a bank guarantee of Rs 329 crore and make a cash deposit of the remaining Rs 250 odd crore.
