Spicejet Vs Kalanithi Maran: Airline Moves Delhi HC Against Order Upholding Arbitral Award

Spicejet on Wednesday approached the Delhi High Court to challenge a single-judge order that upheld an arbitral award asking them to refund Rs 579 crore along with interest to media mogul Kalanithi Maran.

The appeals came up before a bench comprising Justice Yashwant Varma and Justice Dharmesh Sharma. Initially slated for a hearing on September 15, the proceedings were rescheduled for Thursday as the legal representatives for SpiceJet and Singh were absent during the initial listing.

On July 31, the single judge upheld the award announced by the arbitration tribunal on July 20, 2018, in favor of Maran and his company, Kal Airways. The judge stated that there was no indication of patent illegality in the challenged award, and the conclusions therein, although unconventional, would not deeply dismay this court’s conscience.

“In this particular instance, the petitioners have not successfully demonstrated that the contested arbitral award is overtly illegal, contravenes India’s public policy, or violates fundamental legal principles. Thus, they have failed to establish grounds for annulling the award,” the single-judge bench order stated.

The court emphasized that it could only delve into the substance of an award if an evident error or a foundational illegality existed.

Spicejet moved the high court to challenged the arbitral award. The high court determined that the petitioners had not substantiated their arguments for annulling the arbitral award and subsequently dismissed the two petitions lodged by SpiceJet and Ajay Singh.

This legal matter traces back to January 2015, when Ajay Singh, the airline’s former owner, reacquired it from Maran after months of grounding due to financial constraints.

While the tribunal directed Maran to compensate Singh and the airline with Rs 29 crore as penal interest, Singh was instructed to reimburse Maran with Rs 579 crore along with interest. Established in 2016 by the mandate of the Delhi High Court to resolve the dispute concerning share transfer, the tribunal concluded that there was no breach of the share sale and purchase agreement forged between Maran and the current promoter, Ajay Singh, in late January 2015.

In a favorable decision for Ajay Singh, the tribunal, however, dismissed Maran’s plea for damages amounting to Rs 1,323 crore from the Gurugram-based carrier. In February 2015, Kalanithi Maran of the Sun Network and his investment entity, Kal Airways, had relinquished their 58.46 percent stake in SpiceJet to Ajay Singh for a nominal sum of Rs 2, coupled with the obligation of clearing a debt amounting to Rs 1,500 crore. This transfer transpired subsequent to the airline’s grounding owing to acute financial constraints. Ajay Singh, who was one of the initial co-founders of the airline, presently serves as its chairman and managing director.

Under the terms of the arrangement, Maran and Kal Airways asserted that they had remitted Rs 679 crore to SpiceJet for the issuance of warrants and preference shares. Nonetheless, in 2017, Maran approached the Delhi High Court, alleging that SpiceJet had neither issued the convertible warrants and preference shares nor refunded the funds.