SpiceJet gets relief as Delhi HC reverses order upholding validity of arbitral award favoring Kalanithi Maran
New Delhi: The Delhi High Court on Friday reversed its previous decision that upheld the arbitral award favouring Kalanithi Maran over low-cost airline SpiceJet, bringing relief to the financially struggling carrier, media reports said.
A bench comprising justices Yashwant Varma and Ravinder Dudeja issued the ruling in response to a petition filed by SpiceJet's chairman and managing director, Ajay Singh, and the airline itself, reported Moneycontrol.
This petition contested a previous judgment by a single judge in July 2023, which had gave the award.
SpiceJet and Singh challenged the decision to nullify the directive requiring them to reimburse Rs 270 crore to Kal Airways and Maran. They also sought exemption from the 12 percent interest on warrants and the annulment of the 18 percent interest stipulated in the award, the report said.
In February 2015, Maran and his investment vehicle, KAL Airways, transferred their 58.46-percent stake in SpiceJet to Singh. Singh, a co-founder of SpiceJet, assumed the airline's liabilities, amounting to nearly Rs 1,500 crore.
Under the terms of the agreement, Maran and KAL Airways claim to have paid SpiceJet Rs 679 crore for the issuance of warrants and preference shares.
However, Maran alleged that these warrants and preference shares were not allocated to them, forcing them to take legal measures 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 to him and KAL Airways. Instead, Maran was awarded a refund of Rs 579 crore plus interest.
SpiceJet was allowed to provide a bank guarantee worth Rs 329 crore and make a cash deposit of the remaining Rs 250 crore.
As per the award, SpiceJet was obligated to pay Rs 308 crore in cash along with 12 percent interest for a duration of 30 months.
The company also had to pay Rs 270 crore, either through compulsory redeemable preference shares or by refunding the amount as per the terms of a Share Purchase Agreement.
Failure to meet the specified timeline would result in Maran being entitled to an interest of 18 percent.
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