Kalanithi Maran vs SpiceJet: Delhi HC refuses to stay single-judge order upholding arbitral award against airline

The Delhi High Court on Thursday rejected interim relief to low-cost airline SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh, who challenged a single-judge order upholding, in favour of Sun Group Chairman Kalanithi Maran and Kal Airways, an arbitral award passed by the tribunal comprising three retired Supreme Court judges.

A division bench of Justices Yashwant Varma and Dharmesh Sharma said that it cannot stay the order dated July 31 in view of the Supreme Court's direction of February 13 this year. The court, however, issued notice to Maran and Kal Airways.

After the judgement of the Delhi HC, SpiceJet spokesperson said in a statement, "The Division Bench of the Delhi High Court today admitted the appeal of SpiceJet and Ajay Singh and issued notice to Kalanithi Maran and Kal Airways. The Court also stated that they would grant an expedited hearing in the matter. We are hopeful for an expeditious resolution of the appeal. We are committed to presenting our matter diligently and respectfully, seeking a just and fair resolution."

The statement further said, "Also, in the enforcement petition filed by Kalanithi Maran and Kal Airways, the Court in consultation and with the consent of SpiceJet directed the Company to pay ₹100 Crore by 10 September, 2023. SpiceJet will honour the Delhi High Court’s order and make the specified payment within the prescribed timeframe."

On July 31, Justice Chandra Dhari Singh had pronounced the verdict in a section 34 petition filed by the parties in connection with the above-mentioned arbitral award dated July 20, 2018, wherein the decree holders -- Kal Airways and Kalanithi Maran -- were awarded a refund of Rs 308 crore towards the warrants, as well as a refund of Rs 270 crore towards Cumulative Redeemable Preference Shares (CRPS).

Additionally, they were also awarded an interest of 12 per cent towards pendente lite and an interest of 18 per cent from the last due date, in case the payments directed to be made by SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh are not completed within two months from the date of the award.

SpiceJet Singh had challenged the arbitral award by filing a Section 34 petition, seeking to set aside the refund of Rs 270 crore granted to Kal Airways and Maran. Furthermore, they requested the waiver of 12 per cent interest towards warrants and the setting aside of the 18 per cent interest granted under the award for both warrants and CRPS.

On the other hand, Kal Airways and Maran also filed a Section 34 petition, seeking the setting aside of the award to the extent no interest was granted in the amount of Rs 270 crore. They also claimed damages for non-issuance of warrants and CRPS. The high court had dismissed the Section 34 petitions filed by the parties.

After careful consideration and hearing all arguments, the judge found no valid reason to interfere with the arbitral award. On July 24, the high court issued notice to SpiceJet Ltd and Singh in Kal Airways and Maran's application seeking an urgent hearing of its enforcement petition in a case where the former is to pay approximately Rs 390 crore to it towards its interest liability under the arbitral award.

Allowing the application, a bench of Justice Yogesh Khanna had directed SpiceJet and its CMD to file an affidavit disclosing all their assets before the next date of hearing, September 5, and also mandated the physical presence of Singh before it.

The Supreme Court had, on February 13, directed SpiceJet to pay Rs 75 crore to decree holder (Kal Airways and Maran) within a period of three months towards its interest liability under the arbitral award, and had also clarified that in the event of failure to pay, the entire award would become executable in entirety in favour of decree holder.

On the applications seeking further time extension that were moved by SpiceJet for two more months as the three months time period had expired on May 13, and it failed in honouring the top court's order, senior advocate Maninder Singh, appearing for the decree holder, informed the court that the apex court order of February 13 has been now reaffirmed by another order dated July 7, whereby the time applications of SpiceJet are also dismissed. 

The apex court, while dismissing the same, observed that SpiceJet's application is nothing but a delay tactic to not pay money even when there are court orders directing the same.

Singh told the high court that SpiceJet is not honouring the orders passed by any of the courts, and has earlier too failed to comply with the order passed by this court dated November 4, 2020, directing the airlines to file its affidavit of disclosure of its assets.

It was also reaffirmed by an order dated May 29 by this court and the same is not filed to date, he apprised the court. He submitted before Justice Khanna's bench that Order XXI Rule 41 (iii) of the Code of Civil Procedure clearly provides that the court may, for a period not exceeding three months, pass an order of arrest of the Judgement Debtor for not complying with the order to file an affidavit of assets.

Following the top court's order dated February 13, the high court had on May 29, directed SpiceJet and Ajay Singh to pay the entire executable amount under the award to the decree holder.

Catch latest stock market updates here. For all other news related to business, politics, tech, sports and auto, visit Zeebiz.com.