February 26, 2024
Business Featured Latest News

SpiceJet Files Lawsuit Seeking Resolution on ₹ 579 Crore Refund to Kalanithi Maran

SpiceJet and its founder Ajay Singh have lodged an appeal with the Delhi High Court to contest a ruling by a single judge endorsing an arbitration decision that mandates them to reimburse ₹579 crore, plus interest, to media magnate Kalanithi Maran. The appeals were brought before a division bench led by Justices Yashwant Varma and Dharmesh Sharma, which initially scheduled a hearing for September 15 due to the absence of legal representation for SpiceJet and Singh.

Subsequently, SpiceJet’s legal counsel raised the matter before the bench, resulting in the rescheduling of the hearing for Thursday. On July 31, the single judge upheld an arbitration tribunal’s award from July 20, 2018, which favored Maran and his firm, Kal Airways.

The single judge bench’s verdict stated that there was no evident patent illegality in the contested award, and the conclusions within it were not unreasonable to the point of shocking the court’s conscience. The bench highlighted that the petitioners (SpiceJet and Singh) failed to demonstrate that the arbitral award was blatantly illegal, contrary to India’s public policy, or fundamental legal principles, consequently failing to establish grounds for setting aside the award.

Ajay Singh had previously challenged the arbitral award in the high court, but his plea was rejected on the grounds that he failed to substantiate the grounds for nullifying the award. The legal dispute traces back to January 2015 when Singh, the airline’s former owner, repurchased the airline from Maran after it faced months of being grounded due to financial constraints.

While the arbitration tribunal ruled that Maran should pay Singh and the airline ₹29 crore in penal interest, Singh was obligated to repay ₹579 crore plus interest to Maran. The tribunal, established in 2016 by the Delhi High Court to mediate the share transfer disagreement, concluded that no breach occurred in the share sale and purchase agreement between Maran and the current promoter, Ajay Singh, in late January 2015.

In a favorable decision for Ajay Singh, the tribunal dismissed Maran’s appeal for damages amounting to ₹1,323 crore against the Gurugram-based airline. In February 2015, Maran’s investment vehicle, Kal Airways, transferred their 58.46% stake in SpiceJet to Singh for ₹2, along with a debt liability of ₹1,500 crore, after the airline encountered a severe cash crunch. Singh, the airline’s co-founder and current chairman and managing director, was also provided ₹679 crore by Maran and Kal Airways for issuing warrants and preference shares as part of the agreement. Nonetheless, Maran alleged in 2017 that SpiceJet neither issued the convertible warrants and preference shares nor returned the funds, leading to the legal dispute.

Picture Courtesy: Google/images are subject to copyright


Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *