Supreme Court Denies SpiceJet Extension for Payment of Rs 578 Cr Arbitral Award to Maran, Kal Airways
In a significant setback for low-cost airline SpiceJet, the Supreme Court has denies granting an extension for the payment of Rs 578 crore to media baron Kalanidhi Maran and his company, Kal Airways. The payment is related to an arbitral award in a share-transfer dispute. The court dismissed SpiceJet’s request for more time, labeling the ongoing litigation as a “luxury” case. The Delhi High Court had previously directed SpiceJet to deposit Rs 75 crore towards interest on the arbitral award, which the airline failed to pay by the specified deadline.
SpiceJet
The bench comprising Chief Justice D Y Chandrachud and Justice P S Narasimha rejected the arguments put forth by senior advocate Mukul Rohatgi, representing SpiceJet, and stated that the entire award is now executable. The Chief Justice expressed his disapproval of the airline’s attempts to delay compliance with court orders and emphasized the need for the court’s directives to be followed. The Delhi High Court will now execute the award.
Senior advocate Maninder Singh, appearing on behalf of Maran and Kal Airways, argued that SpiceJet had not paid the Rs 75 crore as instructed by the Supreme Court, and no further indulgence should be granted to the airline in the form of an extension. Singh, represented by Karanjawala and Company, pointed out that Rs 75 crore is a substantial amount and highlighted the significance of the case and the parties involved.
The dispute between SpiceJet and Maran and Kal Airways originated from a share-transfer disagreement, with SpiceJet demanding the transfer of 18 crore warrants redeemable as equity shares. In 2017, the high court ordered SpiceJet and its promoter, Ajay Singh, to deposit Rs 578 crore in the court’s registry. The high court allowed SpiceJet to provide a bank guarantee of Rs 329 crore and make a cash deposit for the remaining amount. However, the airline failed to meet the payment deadline.
SpiceJet’s to Pay Maran and Kal Airways
The Supreme Court had previously stayed the high court’s order and directed the encashment of SpiceJet’s bank guarantee of Rs 270 crore to pay Maran and Kal Airways. The court had also instructed SpiceJet to pay Rs 75 crore towards interest within three months. Nevertheless, the high court was informed on May 29 that SpiceJet had not made the interest payment.
The dispute arose due to the non-issuance of warrants in Maran’s favor after Singh regained control of SpiceJet in February 2015. Maran and Kal Airways had transferred their majority stake in SpiceJet to Singh for a nominal amount of Rs 2. The arbitral tribunal later awarded Maran a refund of Rs 578 crore plus interest but rejected his claim for damages of Rs 1,323 crore.
SpiceJet released a statement in response to the Supreme Court’s decision, stating that the present order reaffirms the court’s earlier order from February 2023. The airline highlighted that the primary petition challenging the award is pending before the Delhi High Court. SpiceJet expressed its commitment to finding an amicable settlement through discussions with Maran and Kal Airways, expressing confidence in resolving the matter to the satisfaction of both parties.
This recent development in the long-standing legal battle between SpiceJet and Kalanidhi Maran and Kal Airways underscores the court’s firm stance on compliance with its orders. The denial of an extension for payment highlights the significance of fulfilling financial obligations within the specified timeframe and the repercussions that may follow for non-compliance. The case will now proceed with the execution of the arbitral award, potentially bringing the protracted dispute to a resolution.
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