Delhi Court Upholds Arbitral Award In Favour Of Kalanidhi Maran, Against Spice jet

The Delhi High Court has recently declined to intervene in an arbitral award ordering Ajay Singh, the promoter of Spicejet, to refund Rs. 579 crore along with interest to ‘media baron’ Kalanidhi Maran.

The court upheld the arbitration tribunal’s decision, which was passed on July 20, 2018, in favor of Maran and his company Kal Airways.

Justice Chandra Dhari Singh stated in an 82-page judgment, “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 the 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.”

Ajay Singh approached the high court challenging the arbitral award.

Although the tribunal ruled in Ajay Singh’s favor by rejecting Maran’s appeal for damages amounting to Rs. 1,323 crore from Spicejet.

Furthermore, the High Court stated that the petitioners failed to substantiate grounds for setting aside arbitral awards and dismissing 2 petitions by Spicejet and Ajay Singh.
Court further stated, “After consideration of the entirety of the matter this court does not find any cogent reason to interfere in the impugned award dated July 20, 2018 passed by the arbitral tribunal in the arbitration proceedings initiated between the parties before this court.”

Justice Singh explained that the court couldn’t interfere in the merits of an award unless there was is an error or an illegality in the record.

The high court said, “As per the mandate of law, settled by the Supreme Court, this court shall also not look into the merits of the reasoning and findings given by the arbitral tribunal, as long as there are reasoned findings given by the tribunal while passing the award, which is clearly the case in the instant matter.”

Maran and Kal Airways were represented by the law firm Karanjawala and company.

The case dates to January 2015, when Singh, who owned the airline earlier, bought it back from Maran after it was grounded for months due to a resource crunch.

The dispute originated in January 2015 when Ajay Singh, who was the previous owner of Spicejet, repurchased the airline from Maran after a prolonged grounding due to financial constraints.

The tribunal directed Maran to pay Rs. 29 crore in penal interest to Singh and the airline, while Singh was ordered to refund Rs. 579 crore along with interest to Maran.

The tribunal, established in late 2016 pursuant to the Delhi High Court’s orders, was tasked with resolving the share transfer dispute and found that there was no violation of the share sale & purchase agreement between Maran and the current promoter, Ajay Singh.

In February 2015, Maran and his investment vehicle Kal Airways transferred their 58.46% stake in SpiceJet to Ajay Singh for a nominal amount of Rs. 2, along with the assumption of a Rs. 1,500 crore debt liability, after the airline faced a severe cash crunch.

Ajay Singh, who was one of the airline’s initial co-founders and is now its Chairman and Managing Director, agreed to issue warrants and preference shares in exchange for Rs. 679 crore.

However, Maran alleged that Spicejet failed to issue these instruments or refund the money, leading him to approach the Delhi High Court in 2017 with his grievances.