Execution of a Rs. 578 billion arbitral award: The SC declines to give SpiceJet further time to pay Maran and Kal Airways

The Supreme Court on Friday declined to extend the deadline for paying media tycoon Kalanidhi Maran and his Kal Airways in accordance with an arbitral decision of Rs 578 crore connected to a share-transfer issue, noting that these are “luxury” litigations. This came as a shock to low-cost carriers SpiceJet.

The Delhi High Court had on June 1 ordered SpiceJet to deposit “forthwith” Rs 75 crore that must be paid to Maran and his Kal Airways for interest on the arbitral decision while refusing to extend the deadline.

Prior to this, the top court had ruled that SpiceJet’s 270 crore rupee bank guarantee to Maran and his business would need to be redeemed immediately if the airlines didn’t pay 75 crore rupees by May 13 in interest on the arbitral decision.

On Friday, a bench of Chief Justice D Y Chandrachud and Justice P S Narasimha rejected the adamant arguments of senior attorney Mukul Rohatgi, who was representing SpiceJet, and declined to extend the deadline, claiming that the whole award has now become executable.

“The battery of attorneys is engaged in all of this, and you know, the goal is just to postpone following the court’s instructions. Personally, I won’t support this… The Delhi High Court will now implement the award in accordance with the court’s writ, the CJI stated.

Senior attorney Maninder Singh said up front that nothing had been paid after the Supreme Court ordered Maran and his Kal Airways to pay Rs 75 crore as interest and that no leniency should be shown to them in the shape of an extension of time.

Singh, who was represented by Karanjawala & Company, said that SpiceJet had previously disobeyed a high court order requiring it to produce an affidavit declaring assets.

“Rs 75 crore is not a small amount,” SpiceJet’s attorney said.

“However, they aren’t little gatherings either… These are all expensive legal battles. The award becomes enforceable and no other extensions of time may be given, it said.

SpiceJet stated in a statement that the Supreme Court’s current decision was “the reiteration of its earlier order passed in February 2023.”

“The Hon’ble Delhi High Court has not yet decided the main petition challenging the awards made by both parties. It has to do with paying interest on a principle sum of Rs. 579 crore that has already been paid. SpiceJet is dedicated to reaching a fair agreement and is currently in negotiations with Mr. Kalanithi Maran and KAL Airways. We are still convinced that we can reach an amicable agreement via dialogue that would satisfy both parties,” the statement, which quoted a spokeswoman, stated.

The airline was ordered by the high court to deposit around Rs 243 crore as interest on November 2, 2020 in relation to the share transfer issue with its erstwhile proprietor, Maran, and Kal Airways.

The high court’s ruling was delayed by the top court on November 7, 2020.

The highest court ordered SpiceJet’s bank guarantee of Rs 270 crore on February 13 of this year to be cashed immediately and to pay Maran and Kal Airways their outstanding debts resulting from the arbitral judgement.

It claimed to have ordered SpiceJet to pay Maran and Kal Airways Rs 75 crore for the interest portion of the arbitral judgement within three months.

SpiceJet has not paid the interest sum, nevertheless, according to information provided to the high court on May 29.

In accordance with the 2018 arbitration ruling in the share-transfer issue, the high court had in 2017 ordered SpiceJet and its founder Ajay Singh to deposit around Rs 243 crore as interest due on Rs 578 crore.

SpiceJet had been given six weeks by the high court to complete the payment, however that time period ran out on October 14, 2020.

Following this, Maran and his company filed a high court petition for the attachment of Singh’s whole Spicejet shares and for management takeover due to the non-payment of Rs 243 crore.

Spicejet’s petition was taken into consideration by the top court, which then issued the temporary ruling delaying the high court judgment.

SpiceJet demanded that 18 crore warrants redeemable as equity shares be transferred to them, and Maran and Kal Airways filed a high court petition on the share-transfer issue.

SpiceJet and Singh were required by the high court to deposit Rs 578 billion in the registry of the high court.

SpiceJet was allowed to provide a bank guarantee for Rs 329 crore and deposit the remaining amount in cash in front of the high court.

In July 2017, the Supreme Court rejected SpiceJet’s appeal of the ruling by the High Court.

The arbitral tribunal denied Maran’s claim for damages of Rs 1,323 crore for not granting the warrants to him and Kal Airways on July 20, 2018, but instead granted him a return of Rs 578 crore with interest.

Sun TV Network’s owner Maran then filed a petition with the Supreme Court challenging the arbitration decision.

The issue was a disagreement about the non-issuance of warrants in Maran’s favor after the transfer of ownership to Singh, SpiceJet’s main stakeholder.

After Singh regained control of SpiceJet in February 2015, despite the airline’s financial problems, the conflict erupted.

In February 2015, Maran and Kal Airways sold Singh, the airline’s co-founder, all 35.04 crore equity shares they owned, or 58.46 percent of SpiceJet, for only Rs 2.