Delhi High Court rejects SpiceJet plea for stay on order upholding ₹270 crore arbitral award in favour of Kalanithi Maran

The Delhi High Court on Thursday rejected SpiceJet's plea seeking a stay on the single-judge order upholding an arbitral tribunal award directing the airline to refund over ₹270 crore plus interest to Sun Group promoter Kalanithi Maran..A Division Bench of Justices Yashwant Varma and Dharmesh Sharma rejected the interim relief application noting that in view of the Supreme Court's order of February 13, 2023, the stay order cannot be passed. .The Bench, however, issued notices on the appeals filed by SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh and asked Kalanithi Maran and his KAL Airways to filed their response. The appeal will now be heard on October 31..Senior Advocate Amit Sibal appeared for SpiceJet and argued that he is challenging the exorbitant interest of 18% that the arbitral tribunal directed SpiceJet to pay. Sibal said that SpiceJet could not pay the money to Maran because of lack of funds. He added that the airline was servicing locations in the country which even the Air India does not. The Bench, however, said that the Supreme Court's order binds it and therefore, any order absolving SpiceJet of its payment obligations would be in violation of the apex court's orders. Senior Advocate Maninder Singh appeared for Maran and KAL Airways. .According to reports, Maran had transferred his 58.46% stake in the airline to Singh. As per the deal, Maran was supposed to get redeemable warrants in return for the money invested by him during his tenure as a promoter of the airline. Maran was liable to get 18 crore warrants, which translated to 26% shareholding in SpiceJet.It was Maran's case that neither the convertible warrants nor the preference shares were issued to him, and he did not get any money. As a result, Maran claimed, he suffered damages of nearly ₹1,323 crore. He approached the Delhi High Court, which referred the matter to arbitration.The arbitral tribunal passed its order in July 2018 and ordered SpiceJet to refund ₹270 crore to Maran. The tribunal also ordered the airline to pay interest of 12% per annum on the amounts paid towards warrants and 18% per annum on the sums awarded to Maran if the money is not paid on time.However, the tribunal also held that there was no breach of the share sale and purchase agreement reached between Maran and SpiceJet and Ajay Singh. Therefore, it rejected Maran's demands for restitution of his shareholding and his claim for damages.Maran and his company KAL Airways, as well SpiceJet and Ajay Singh, then filed petitions before the High Court against the arbitral tribunal's order..On July 31, 2023, Justice Chandra Dhari Singh had ordered Spicejet to pay the refund to Maran and held that the low-cost carrier failed to prove that the tribunal's order suffered from any illegality."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 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," the Court said.Justice Singh also rejected Maran's plea against the same arbitral tribunal order denying his prayers for restitution of his 58.46% shareholding in SpiceJet and his claim for damages.The Court said that these prayers are beyond the scope of Section 34 of the Arbitration and Conciliation Act (under which both Maran and SpiceJet had filed their pleas).Ultimately, Maran only pressed for setting aside of order to the extent that it allowed SpiceJet's counter claim of ₹100 crore plus interest.Justice Singh rejected this prayer as well..Kalanithi Maran and KAL Airways were represented through Senior Advocate Maninder Singh and Nandini Gore (Senior Partner), Sonia Nigam (Principal Associate), Yash Dubey (Associate) and Akarsh Sharma (Associate) from Karanjawala & Co.