Apex court stayed the high court order directing SpiceJet to deposit Rs. 243 crores in Kalanithi Maran case:

Apex court stayed the high court order directing SpiceJet to deposit Rs. 243 crores in Kalanithi Maran case:

On Friday, the apex court stays the order issued by Delhi High Court to the airline company to deposit Rs 243 crore in the ongoing dispute with its former promoter Kalanithi Maran.

The bench of Justice Consisting of Chief Justice of India, SA Bobde issued notice to Maran in an appeal filed by SpiceJet against orders passed by Delhi high court in September and October this year in a share transfer dispute between Kalanithi Maran and the airlines.

The Petition has been before the Delhi High Court on October 22, seeking attachment of SpiceJet promoter, Ajay Singh’s shareholding after the airline failed to deposit Rs 243 crore in favour of the Sun Group Chairman.

In the previous month, the High Court had asked the airline company to make the deposit of the amount within six weeks. The deadline set by it had expired on October 14. The amount of 243 crores is an interest payout of the sum Maran and his KAL Airways won as a refund from an arbitration panel in 2018.

The petition in the supreme court questions “whether without deciding the challenge to the arbitration award under Section 34 of the Act (pending since January 2019), it was just or equitable for the High Court, in enforcement proceedings, to direct the petitioners to further deposit Rs. 242.93 crores to secure the interest component, by erroneously interpreting the arbitral award and an audit report. The plea relies on the existential crisis which the airlines are facing during COVID-19.

Background:

In the year 2015, Maran and his investment vehicle, KAL Airways had transferred their 58.46 percent in SpiceJet to Singh, the current Chairman and Managing Director, for a nominal amount of Rs 2 after the airline’s operations were upended by severe cash shortage. The co-founder of SpiceJet, took on the airline’s liabilities of around Rs 1,500 crore. As part of the agreement, Maran and KAL Airways said they paid SpiceJet Rs 679 crore for issuing warrants and preference shares.Maran started the case in the Delhi High Court in 2017 against Singh and SpiceJet after he said that neither the convertible warrants and preference shares were issued nor was the money returned.

In the year 2018, an arbitration panel rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore plus interest.SpiceJet was permitted to furnish a bank guarantee for Rs 329 crore and make a cash deposit for the remaining sum of Rs 250 crore. Soon after Maran contested the ruling of the arbitration panel that had not only rejected his claim of damages but also of regaining control of the airline. The Delhi High Court directed SpiceJet to pay up.The petition before the Supreme Court states that before directing deposit of such huge sums to secure the interest component of the award, the High Court erred in not considering that the interest component (qua both warrants and CRPS) is disputed in the Section 34 proceedings filed by the Petitioner.

 

 

 

 

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