SpiceJet vs Kalanithi Maran: SC upholds high court order, sends dispute back to single judge

The Supreme Court on Friday upheld a division bench order that remanded the arbitration dispute back to a single judge in Kalanithi Maran’s case against private carrier SpiceJet, providing it with a much-needed relief.

The Delhi High Court in May overturned a previous ruling that upheld an arbitral award in favor of Kalanithi Maran, former promoter of SpiceJet, against the airline. On July 31, 2023, a single-judge bench of the high court declined to intervene in the 2018 arbitral award, which mandated SpiceJet, led by Ajay Singh, to refund Rs 579 crore with interest to Maran. The award included Rs 308 crore for warrants and Rs 270 crore for CRPS, plus interest.

Chief Justice of India DY Chandrachud said that the division bench of the high court was justified in sending the case back for reconsideration as the single judge had not ‘applied his mind at all’. 

"This is atrocious... Where has he (single judge) even applied his mind? We are in agreement with reasoning of the division bench sending it back to single judge for order again under Section 34,” said CJI Chandrachud who directed the case to be placed before another judge for fresh consideration. 

In May 2024, a division bench of the Delhi High Court passed an order on a plea filed by SpiceJet Chairman and Managing Director Ajay Singh and the airline against a single-judge order from July 2023, which had affirmed the award. The court sent the case back to a single judge for fresh consideration, citing inadequate reasoning in the challenged order.

The case

In February 2015, Maran and KAL Airways transferred their 58.46 per cent stake in SpiceJet to Singh. Singh, a co-founder of SpiceJet, took on the airline’s liabilities of around Rs 1,500 crore. Maran and KAL Airways claimed they paid SpiceJet Rs 679 crore for issuing warrants and preference shares. 

However, Maran alleged that the warrants and preference shares were not allotted and initiated arbitration proceedings against SpiceJet and Singh. 

In July 2018, an arbitration panel rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore plus interest.