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 airlines SpiceJet. The Delhi High Court ordered SpiceJet to deposit “forthwith” Rs 75 crores that must be paid to Maran and his Kal Airways in order to cover interest on the arbitral award by June 1 while refusing to prolong the deadline.
Prior to this, the top court had ruled that SpiceJet’s 270 crores rupee bank guarantee to Maran and his firm would need to be redeemed immediately if the airlines didn’t pay 75 crores 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 entire award has now become executable.
“The battery of solicitors is involved in all of this, and you know, the goal is simply to postpone following the court’s orders. 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 stated 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 form of an extension of time.
The purpose of this, as you may have guessed, is to put off following the court’s orders, according to the battery of solicitors engaged. Personally, I won’t consent to this. The Delhi High Court will now carry out the court’s order and comply with its writ, the CJI stated.
When Maran and his Kal Airways were directed by the Supreme Court to pay Rs 75 crore as interest, senior lawyer Maninder Singh stated at the outset that nothing had been paid and that no indulgence should be given to them in the form 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 remarked.
“However, these 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 stated.
The airline was ordered by the high court to deposit roughly 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 order was stayed 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 judgment.
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, though, 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 promoter Ajay Singh to deposit approximately Rs 243 crore as interest payable on Rs 578 crore.
SpiceJet was allowed to present 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 involved a disagreement over the non-issuance of warrants in Maran’s favour following the transfer of ownership to Singh, SpiceJet’s controlling 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 just Rs 2.
A SpiceJet representative said in a statement, “The Supreme Court’s current order is a repetition of its earlier order from February 2023. The Hon’ble Delhi High Court has not yet decided on the main petition, which contests the awards made by both parties. It has to do with paying interest on a principal sum of Rs. 579 crores 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 continue to be optimistic that we can reach an amicable agreement through discussions.
