An arbitration tribunal has rejected the claim of former SpiceJet owner Kalanithi Maran and his company KAL Airways for Rs 1,323 crore as damages from SpiceJet..The tribunal was constituted by the Delhi High Court in 2016 when applications under the Arbitration and Conciliation Act were moved for seeking various interim reliefs..The dispute arose subsequent to the signing of a Share Sale Purchase Agreement (SSPA). The SSPA was for sale of shares held by the claimants in SpiceJet to Ajay Singh..For various reasons, under the control and management of the claimants (during the period from November 2010 to February 2015), SpiceJet ran into extreme financial distress and was facing imminent shut down with huge outstanding dues to various creditors..The claimants then approached Ajay Singh, wherein they offered to transfer their shareholding of 58.46% in SpiceJet to him for a consideration of Rs. 2 and Singh was to immediately take over as the promoter of the company. The claimants further undertook to provide “commuted support to the extent of 450 Crores”..One of the conditions for this sale was that that the claimants would acquire 24% shares in SpiceJet, consequent to, inter alia, issuance of warrants and Convertible Redeemable Cumulative Preference Shares (CRPS) by SpiceJet to the claimants which were to be issued subject to regulatory approval..However, an approval from the Bombay Stock Exchange did not fall in place, and the claimants alleged malicious inaction/omission on the part of SpiceJet to respond to BSE despite repeated reminders..The claimants then demanded an amount of Rs. 1323 crores as damages on account of alleged breached by SpiceJet and Singh for (i) non-issuance of warrants, (ii) non-issuance of CRPS..The tribunal, comprising of retired Supreme Court Judges Arijit Pasayat, Hemant Laxman Gokhale and KSP Radhakrishnan, ruled that in so far as the matter of issuance of warrants was concerned, there was no breach by the SpiceJet and Singh in pursuing the approval from the relevant authority (BSE and SEBI) and since the same was not forthcoming, SpiceJet and Ajay Singh cannot be held to be in breach or be made liable for damages..The tribunal has, however, held that the amount of about Rs.308 crore earlier received by SpiceJet as advance towards subscription of warrants is to be refunded to the claimants along with interest of 12% p.a for a period of 30 months..With regard to CRPS, the tribunal held that the claimants were in breach of the terms of the SSPA as they failed to provide to the Company a sum of Rs. 100 crore required for issuance of CRPS of Rs. 370 Crore..The tribunal has advised the Parties to explore the possibility of issuance of CRPS and in the event such efforts do not fortify in two (2) months’ time, the Company is required to thereafter refund the amount of about Rs.270 crore (which is arrived at after adjusting the counter claim of Rs.100 crore which has been allowed)..The tribunal further held the claimants to be in breach of the SSPA and allowed a counter claim of Rs.29 crore in favour of SpiceJet in addition to setting of a sum of Rs. 100 crore not brought in by the claimants..Link Legal represented SpiceJet and Ajay Singh in the arbitration. The team from the Firm was led by Managing Partner Atul Sharma assisted by Associate Partner Abhishek Sharma and Associates Kashish Arora and Abhinav Sharma..The claimants were represented by Luthra and Luthra.
