SpiceJet must pay Maran and Kal Airways by a certain date, but SC won’t extend that deadline

The Supreme Court on Friday declined to extend the deadline for paying media tycoon Kalanidhi Maran and his Kal Airways in response to an arbitration 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 ordered SpiceJet to deposit “forthwith” Rs 75 crore that must be paid to Maran and his Kal Airways for interest on the arbitral decision on June 1 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.

The passionate arguments of senior attorney Mukul Rohatgi, who was representing SpiceJet, were rejected by a panel of Chief Justice D Y Chandrachud and Justice PS Narasimha on Friday. The court also declined to extend the deadline, stating that the whole award has now become executable.

“The battery of solicitors 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.

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 on November 7, 2020, by the top court.

The supreme court ordered SpiceJet’s bank guarantee for Rs 270 crore to be redeemed immediately and delivered to Maran and Kal Airways as payment for their obligations under the arbitral judgement on February 13.

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, however, paid the interest sum, as was disclosed 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 ended 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 judgement.

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.

Maran sought damages of Rs. 1,323 crore from the arbitral tribunal on July 20, 2018, but it rejected his request and instead gave him a return of Rs. 578 crore plus interest.

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

The issue was a disagreement over the non-issuance of warrants in Maran’s favour 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.

With a 58.46 percent ownership in SpiceJet, Maran and Kal Airways had sold all of their Rs 35.04 crore equity shares in the airline to Singh, the company’s co-founder, in February 2015 for only Rs 2.