 "SpiceJet")
The Delhi High Court (HC) on Friday overturned its previous ruling that had upheld the arbitral award favouring Kalanithi Maran over low-cost airline SpiceJet. This decision offers a respite for the cash-strapped carrier.
A bench comprising Justices Yashwant Varma and Ravinder Dudeja issued the order in response to a plea filed by SpiceJet's Chairman and Managing Director (CMD), Ajay Singh, and the airline. Their appeal contested a prior single-judge order from July 2023, which had affirmed the award.
With this ruling, the case returns to the judge for reconsideration.
SpiceJet and Singh had specifically sought to annul the portion of the award which instructed them to refund Rs 270 crore to Kal Airways and Maran. They also sought a waiver of a 12 percent interest on warrants and the nullification of the 18 percent interest stipulated in the award.
What is the case?
In February 2015, Maran and his investment vehicle, KAL Airways, transferred their 58.46-per cent stake in SpiceJet to Singh, who was also a co-founder of the airline. Alongside the ownership transfer, Singh assumed the airline's liabilities, totaling around Rs 1,500 crore.
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As per the agreement, Maran and KAL Airways claimed to have paid SpiceJet Rs 679 crore for the issuing of warrants and preference shares. However, Maran alleged that these shares were not allotted, prompting him to initiate arbitration proceedings against SpiceJet and Singh.
In July 2018, an arbitration panel dismissed Maran's claim for damages amounting to Rs 1,323 crore due to the non-issuance of warrants. Instead, it awarded him a refund of Rs 579 crore plus interest.
SpiceJet was directed to furnish a bank guarantee of Rs 329 crore and make a cash deposit of the remaining Rs 250 crore.
According to the award, SpiceJet was obligated to pay Rs 308 crore in cash along with 12 per cent interest over 30 months, and an additional Rs 270 crore in either compulsory redeemable preference shares or by the return of money in terms of a Share Purchase Agreement. Failure to meet the specified timeline entitled Maran to an 18 per cent interest.
