On Monday, the Delhi High Court affirmed an arbitral decision made in favour of the promoter of Kal Airway, Kalanithi Maran, and low-cost airline SpiceJet. The decision was made by a panel made up of three former Supreme Court judges.
In a section 34 petition filed by the parties in relation to the aforementioned arbitral award dated July 20, 2018, Justice Chandra Dhari Singh rendered the decision. The decree holders, Kal Airways and Kalanithi Maran, were given a refund of Rs 308 crore for the warrants and Rs 270 crore for the cumulative redeemable preference shares (CRPS).
They were also granted interest payments of 12% towards pendente lite and 18% from the last due date in the event that SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh’s directed payments are not made within two months of the award date.
By filing a section 34 suit, SpiceJet Singh sought to overturn the reimbursement of Rs 270 crore given to Kal Airways and Maran in response to the arbitral verdict.
Additionally, they asked that the 18% interest given under the award for both warrants and CRPS be set aside as well as the waiver of the 12% interest owed on warrants.
In contrast, Kal Airways and Maran also filed a Section 34 appeal asking for the award to be set aside in the event that no interest was given on the sum of Rs 270 crore. They also claimed damages for CRPS and the failure to issue warrants.
The parties’ Section 34 applications were rejected by the high court on Monday. The court carefully considered all of the issues and concluded that there was no justification for interfering with the arbitral verdict.
This decision, which resolves the dispute in favour of Kal Airways and Maran, represents a crucial turning point in the continuing legal conflict between the parties.
On July 24, the high court sent notice to SpiceJet Ltd. and Singh about Kal Airways and Maran’s request for an immediate hearing of their enforcement suit. In this matter, the latter is expecting payment from the former of almost Rs. 390 crore to cover its interest obligation under the arbitral decision.
After granting the motion, a Justice Yogesh Khanna-led panel ordered SpiceJet and its CMD to submit an affidavit outlining all of their assets by the next hearing date, September 5, and required Singh to appear in person.
On February 13, the Supreme Court issued an order requiring SpiceJet to pay Rs 75 crore to the decree holder (Kal Airways and Maran) within three months to settle its interest obligation under the arbitral award. The Supreme Court also made it clear that, in the event of non-payment, the entire award would become fully executable in the decree holder’s favour.
Senior advocate Maninder Singh, speaking on behalf of the decree holder, informed the court that the apex court order of February 13 has now been reaffirmed by another order dated July 7, whereby the time applications of SpiceJet are also dismissed. The three months time period had expired on May 13, and SpiceJet had failed to abide by the top court’s order.
While dismissing the case, the supreme court noted that SpiceJet’s motion was only a delay strategy to avoid paying money even though there were court judgements requiring it.
Singh informed the high court that SpiceJet is disobeying all court orders and has previously disobeyed an order from this court dated November 4, 2020 for the airlines to produce an affidavit of disclosure of their assets. He informed the court that it was also reiterated by this court in an order dated May 29 but that it has not yet been submitted.
He argued before Justice Khanna’s bench that Order XXI Rule 41 (iii) of the Code of Civil Procedure expressly allows the court to issue an arrest warrant for the judgement debtor if they fail to comply with the directive to provide an affidavit of assets for a period of time not to exceed three months.
The high court ordered SpiceJet and Ajay Singh to pay the total executable sum under the award to the decree holder by May 29 in response to the top court’s ruling from February 13th.
For SpiceJet Ltd. and Ajay Singh, senior attorney Abhinav Vashisht appeared on Monday with attorney Atul Sharma. Kal Airways Pvt Ltd and Kalanithi Maran were represented by senior attorney Maninder Singh, principle associate Sonia Nigam, associate Yash Dubey, and associate counsel Akarsh Sharma from Karanjawala & Co.