Delhi HC sets aside single-bench order asking SpiceJet to pay Rs 270 cr to Kalanithi Maran

In a respite to low-cost airline SpiceJet, the Delhi High Court (HC) on Friday set aside its own ruling that upheld an arbitral award asking the airlines to refund Rs 270 crore to Kal Airways and Kalanithi Maran. A bench comprising Justices Yashwant Varma and Ravinder Dudeja issued the order in response to a plea filed by SpiceJet's Chairman and Managing Director (CMD), Ajay Singh, and the airline. Their appeal contested a prior single-judge order from July 2023, which had affirmed the award. 

The single bench ruled that the award did not suffer from patent illegality, maintaining that the low-budget airline also failed to make a case for setting aside the award.

In July 2023, the single bench said: “There is nothing in the impugned Award to suggest that it suffers from patent illegality and the findings therein are perverse and will shock the conscience of this Court. In the instant case, the petitioners have not been able to prove that the impugned Arbitral Award is patently illegal, against [the] public policy of India or fundamental policy of law and thus have failed to make out a case for the award to be set aside.” 

SpiceJet and Singh had approached the Delhi HC where they sought to annul the portion of the award which instructed them to refund Rs 270 crore to Kal Airways and Maran. They also sought a waiver of a 12 percent interest on warrants and the nullification of the 18 percent interest stipulated in the award.

The case dates back to 2015. Maran transferred his 58.46% stake in the airline to Singh, expecting to receive redeemable warrants in return for his investment as a promoter. Maran was entitled to 18 crore warrants, equating to a 26% shareholding in SpiceJet, but claimed he received neither the warrants nor any money, leading to damages of nearly Rs 1,323 crore. 

He took the case to the Delhi High Court, which referred it to arbitration. In July 2018, the tribunal ordered SpiceJet to refund Rs 270 crore to Maran and pay 12% annual interest on amounts paid for warrants and 18% on sums awarded if unpaid on time. 

However, the tribunal found no breach in the share sale agreement, rejecting Maran's restitution and damages claims. Both parties filed petitions against the tribunal's order in the High Court.