 "SpiceJet")
In a setback to SpiceJet in its legal battle with Chennai-based Sun Group’s Kal Airways and its founder Kalanithi Maran, a former promoter of the airline, the Delhi High Court (HC) on Monday refused to set aside an arbitral award in favour of Maran in 2018. The award directed SpiceJet and its promoter Ajay Singh to refund Rs. 579 crore plus interest to Maran.
The arbitral award stated that former promoter Kal Airways and Maran are entitled to a refund of Rs. 308 crore towards warrants and Rs. 270 crore towards cumulative redeemable preference shares.
“Furthermore, Kal Airways and Maran were also awarded interest of 12 per cent towards pendente lite (pending litigation) and an interest of 18 per cent from the last due date in terms of the arbitral award in case the payments, as directed, to be made by SpiceJet and (Ajay) Singh are not made within two months from the date of the award,” read a statement by Karanjawala & Co., representing Kal Airways and Maran.
According to media reports, the airline had sought to set aside the award which directed them to refund Rs. 270 crore to Maran, while also seeking a waiver on interest. The execution proceeding against the award is reportedly pending before another Bench of the Delhi HC.
The dispute between the two sides dates back to 2015 when Maran sold his 58.46 per cent stake in SpiceJet for a nominal purchase price of Rs. 2. In 2016, Maran approached Delhi HC, citing breach of agreement by the airline for not issuing him share warrants and preference shares, notwithstanding fund infusion. The court in 2017 ordered the airline to deposit Rs. 579 crore and asked both sides to settle the matter via arbitration. In 2018, an arbitration tribunal awarded Maran Rs. 579 crore plus interest.
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Appeals were filed by both sides against the arbitration order. Maran also filed an application for enforcement. In September 2020, the Delhi HC ordered SpiceJet to pay Maran Rs. 242 crore in interest. The airline moved Supreme Court (SC) in November and secured a stay.
In February this year, the apex court directed that SpiceJet’s Rs. 270-crore bank guarantee should be encashed, and the airline should pay Rs. 75 crore towards interest within three months.
Later in May, Maran approached the HC, seeking payment from the airline. Earlier in July, the SC had directed SpiceJet to pay the entire arbitral amount as SpiceJet did not follow the timeline given in February.
