The Delhi High Court on Thursday denied to stay a single judge order upholding an arbitral award asking Spicejet and its promoter Ajay Singh to refund Rs.579 crore plus interest to media baron Kalanithi Maran.
A division bench comprising Justices Yashwant Verma and Dharmesh Sharma issued a notice and requested a response from Maran and his company, Kal Airways, concerning an appeal submitted by Singh and SpiceJet. This appeal challenges the single judge’s decision delivered on July 31.
The high court dismissed the application for stay on the single judge’s order and listed the appeal for next hearing in October 31.
On July 31, the single judge validated the award issued by the arbitration tribunal on July 20, 2018, favoring Maran and Kal Airways.
The single judge bench stated in its verdict, “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 verdict highlighted that the court’s intervention in award assessment is limited to instances that was apparent face of the record or a illegality. Singh moved the single judge bench of the high court to contest the arbitral award.
The high court emphasized that the petitioners had not substantiated the grounds for setting aside the arbitral award, leading to the dismissal of the petitions by both SpiceJet and Singh.
The case dates from January 2015 when Singh, the former owner of the airline, reacquired it from Maran after a prolonged grounding period due to financial constraints.
While the tribunal asked Maran to pay Rs 29 crore in penal interest to Singh and directed to refund Rs 579 crore with interest to Maran.
The tribunal, established in 2016 as per the Delhi High Court’s directives to resolve the share transfer dispute, ruled that there was no breach of the share sale and purchase agreement between Maran and Singh reached in late January 2015.
Despite rejecting Maran’s plea for damages amounting to Rs 1,323 crore from the carrier based in Gurugram, the tribunal provided respite to Singh.
In February 2015, Maran of the Sun Network and his investment entity, Kal Airways, transferred their 58.46% stake in SpiceJet to Singh for Rs 2 along with a debt liability of Rs 1,500 crore, following the airline’s financial crisis. Singh, who was the initial co-founder of the airline, presently serves as its chairman and managing director.
According to the agreement, Maran and Kal Airways claimed to have remitted Rs 679 crore to SpiceJet for issuing warrants and preference shares. However, in 2017, Maran approached the Delhi High Court alleging that SpiceJet had neither issued convertible warrants and preference shares nor returned the funds.
