SC rejects Maran's plea against Delhi HC verdict in Spicejet arbitral award case

In a relief to SpiceJet, the Supreme Court on Friday refused to entertain a plea of Kalanithi Maran and Kal Airways against the Delhi High Court order that had set aside an arbitral award asking the low-cost carrier to refund Rs 579 crore with interest to the media baron and his firm.

A single judge bench of the Delhi High Court had on July 31, 2023 upheld the arbitral award asking Spicejet promoter Ajay Singh to refund Rs 579 crore plus interest to Maran and his company Kal Airways.

The award was granted by the arbitration tribunal on July 20, 2018.However, on May 17 this year, a division bench of the Delhi High Court, while dealing with an intra-court appeal against the order, set aside the single judge bench order that had upheld the arbitral award.

The division bench allowed the appeals of Singh and SpiceJet against the single judge bench order and remanded the matter back to the court concerned to consider the petitions challenging the arbitral award afresh.Maran and Kal Airways moved the top court against the decision.

"No, no...We will not interfere. Let it go back (to the high court)," a bench comprising Chief Justice D Y Chandrachud and Justices JB Pardiwala said while refusing to accept the submissions of senior advocate Abhishek Singhvi, appearing for Maran and his firm.The top court was also critical of the single judge bench judgement of the high court."Come to the single judge order first...All that we can say about single judge is filling up 250 pages is not writing a judgment under section 34 (of the Arbitration and Conciliation Act).

"This is atrocious. Just a number of the Supreme Court judgements (is cited) saying (scope of ) interference is limited. Let us not make any observations about this single judge. Where has he even applied his mind?" the CJI observed when Singhvi tried to refer to legal points of the case.Section 34 of the Act deals with applications for setting aside the arbitral awards.

Refusing to interfere with the high court's order, the top court said it was in agreement with the reasoning of the division bench sending it back to single judge for deciding the case afresh.

"The order has to be carefully articulated. On the other hand, the judge must apply mind to the grounds of challenge and then deduce if interference is warranted," the CJI said.

"The Delhi High Court should now assign the case to a judge other than the single judge who was assigned the case," the bench said, trashing the plea of Maran.

SpiceJet hailed the apex court's decision."SpiceJet Ltd. Welcomes the Supreme Court's decision to dismiss an appeal filed by Kalanithi Maran and Kal Airways challenging a Delhi High Court division bench ruling in favour of the airline," the low-cost carrier said in a statement.

On July 31, 2023, the single judge had upheld the award announced by the arbitral tribunal on July 20, 2018 in favour of Maran and Kal Airways, saying the court was barred from entering into the merits of an award unless there was an error that was apparent on the face of the record or an illegality that goes to the root of the matter.

Singh had approached the single judge bench of the high court challenging the arbitral award.

The case dates to January 2015, when Singh, who owned the airline earlier, bought it back from Maran after it was grounded for months due to resource crunch.

While the arbitral tribunal had asked Maran, who also owns the Sun Group and several publications, to pay Singh and the airline Rs 29 crore in penal interest, while Singh was asked to refund Rs 579 crore plus interest to Maran.

The tribunal, created in 2016 on the orders of the Delhi High Court to adjudicate the share transfer dispute, had held that there was no breach of a share sale and purchase agreement reached between Maran and current promoter Singh in late January 2015.In a relief to Singh, the tribunal had, however, rejected Maran's appeal for damages of Rs 1,323 crore from the Gurugram-based carrier.

In February 2015, Maran of the Sun Network and Kal Airways, his investment vehicle, had transferred 58.46 per cent stake in SpiceJet to Singh for Rs 2 (Rs two only) along with Rs 1,500 crore debt liability, after the airline was grounded due to a severe cash crunch.

Singh was the co-founder of the airline and is now its chairman and managing director.

As part of the agreement, Maran and Kal Airways had claimed to have paid Spicejet Rs 679 crore for issuing warrants and preference shares.

However, Maran approached the Delhi High Court in 2017, alleging SpiceJet had neither issued convertible warrants and preference shares nor returned the money.