Relief to SpiceJet, SC sends back its dispute with Kalanithi Maran to HC

In a relief for SpiceJet, the Supreme Court said on Friday it “found no error” in the Delhi High Court division bench order that sent back the arbitration case to the single judge in Kalanithi Maran's dispute with the low-cost private airline.

The Delhi High Court in May 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 Maran.

The division bench of justices Yashwant Varma and Ravinder Dudeja, while allowing the appeal filed by SpiceJet Chairman and Managing Director (CMD) Ajay Singh, had said, “Appeal stands allowed. Consequently, the July 31, 2023 order (single judge) is set aside."

 

Maran appealed against the order in the apex court.

When the case came up for hearing in the Supreme Court, Chief Justice of India DY Chandrachud said the division bench was right in sending the case back for reconsideration before the single judge, asserting that the judge “had not applied his mind at all”.

"Merely filling 200 pages with the Supreme Court judgement is not enough, the judgment should also have reasoning," the CJI said. 

Reading the single judge order, a miffed CJI said, "This is atrocious... Where has he (single judge) even applied his mind? We are in agreement with the reasoning of the division bench to send it back to a single judge for order again..."

The court ordered that the case be placed before the Chief Justice of the High Court for fresh consideration from another judge.

After the ruling, SpiceJet share price gained 4.5 per cent and rose to Rs 59.79 on the BSE.

The airline welcomed the Supreme Court’s ruling.

"The Supreme Court’s dismissal of Maran's appeal vindicates SpiceJet's position in this protracted legal battle. Following this success, SpiceJet will now pursue a refund of Rs 450 crore, as outlined in our previous press release. In addition to significant steps being taken by SpiceJet to raise new funds, this refund will additionally strengthen the airline’s financial position and enable further expansion," it said in a statement.

SpiceJet and Singh had specifically sought to annul the portion of the arbitral award which instructed them to refund Rs 270 crore to Kal Airways and Maran. They also sought a waiver of 12 per cent interest on warrants and the nullification of the 18 per cent interest stipulated in the award.

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. 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.