Spicejet Should Pay Entire Arbitral Award Of Rs 380 Crore To Its Former Promotor Kalanithi Maran: Delhi High Court

The Delhi High Court has directed SpiceJet to pay the entire arbitral award of Rs. 380 crore to the airline’s former promotor, Kalanithi Maran, and his firm, Kal Airways Pvt. Ltd, in an execution petition filed by Maran seeking enforcement of a 2018 arbitral award passed in his favour.

The court has also directed the airline to file an Affidavit of its assets within the specified time frame.

The bench of Justice Yogesh Khanna passed the order after noting that the airline had failed to comply with the Supreme Court’s order dated 13.02.2023. The Apex Court in the said order had directed SpiceJet to pay an amount of Rs.75 crore to Maran within a period of three months, towards its interest liability, pending the disposal of the petition under Section 34 of the Arbitration and Conciliation Act, 1996. In the event of default in compliance with the said order, the top court had held that the entire arbitral award would be executable forthwith.

The order stems from a long-drawn battle between Maran and the current promoter of SpiceJet, Ajay Singh, and the airline, over a share transfer dispute.

In 2015, Maran had sold his entire 58.46 per cent stake in SpiceJet to its co-founder, Singh.

Maran sued SpiceJet in 2017 claiming that the airline had breached the share transfer agreement by not issuing share warrants and preference shares to him and his firm, Kal Airways. He claimed that for the said purpose, he had deposited Rs. 679 crore with SpiceJet.

In 2018, an Arbitral Tribunal awarded a refund of Rs. 579.08 crore plus interest to Maran and his firm.

The Delhi High Court, by an order dated 02.09.2020, in the execution petition filed by Maran, had directed SpiceJet to deposit an amount of over Rs. 242 crore within three weeks. An application seeking modification of the said order, was rejected by the court. By an order dated 04.11.2020, SpiceJet was also directed to file an affidavit of its assets.

The orders were challenged by the airline before the Supreme Court, who directed the parties to encash the bank guarantee and pay the specified amount directly to the award holders. Vide the Apex Court’s order dated 13.02.2023, SpiceJet was also required to pay an additional amount of Rs. 75 crore within three months, representing its interest liability, failing which, the award was executable forthwith in its entirety.

Before the Delhi High Court, Maran submitted that the amount of Rs. 75 crore had not been deposited yet, resulting in an increased interest liability of Rs. 380 crore.

To this, SpiceJet said that it had already paid the principal amount of Rs. 579.08 crore and had applied to the Supreme Court for a three-month extension to make the payment of Rs. 75 crore towards its interest liability. Thus, the airline requested the court to refrain from directing it to deposit the remaining balance.

The same was objected by the counsel for Maran, who claimed that the High Court has no power to extend the time limit granted by the Supreme Court vide order dated 13.02.2023.

The High Court observed that since there is no modification of the top court’s order dated 13.02.2023, the same needs to be followed.

“Since the judgment debtor had failed to pay an amount of Rs.75.00 crores to decree holder, hence in terms of para 15(ii) of the order dated 13.02.2023 of the Hon’ble Supreme Court, there is no other alternative except to call upon the judgment debtors to deposit the entire outstanding amount qua interest forthwith, thus is so directed. Affidavit of assets be also filed within four weeks from today,” the court directed.

The court has listed the matter on 05.09.2023.

Case Title: Kal Airways Pvt. Ltd vs M/s Spicejet Ltd. & Anr.

Citation: 2023 LiveLaw (Del) 481

Counsel for the Petitioner: Mr. Maninder Singh, Senior Advocate with Ms. Nandini Gore, Ms. Sonia Nigam, Mr. Yash Dubey, Mr. Yashwant Gaggar, Mr. Prabhas Bajaj, Advocates.

Counsel for the Respondent: Mr. Sandeep Sethi, Senior Advocate with Mr. Abhinav Sharma, Advocate.

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