Delhi High Court has granted temporary relief to cash-strapped SpiceJet (SG, Delhi International) and its chairman and managing director Ajay Singh, by setting aside a previous single-bench ruling that ordered them to refund INR5.79 billion rupees (USD69.5 million) with interest to former co-owner Kalnithi Maran.
In their judgment delivered on May 17, two judges, Yashwant Verma and Ravinder Dudeja, accepted an appeal filed by Singh and SpiceJet against the July 31, 2023, order of the single bench. The case has now been remanded to the single-judge bench for reconsideration.
On July 31 last year, the bench declined to intervene in a 2018 arbitral award requiring SpiceJet to reimburse INR5.79 billion with interest to Maran. Singh's challenge primarily focused on an arbitral tribunal's decision to impose an 18% interest rate on SpiceJet.
The dispute originated in January 2015 when SpiceJet co-founder Singh repurchased a majority stake of 58.46% in the airline from Maran, through the latter's Sun Network and investment vehicle KAL Airways. Singh had paid a nominal amount but assumed the airline's debt of INR15 billion (USD180 million) after it had ceased operations for several months due to financial constraints. Per the agreement, Maran and KAL Airways claimed to have paid SpiceJet INR6.79 billion (USD81.5 million) for issuing warrants and preference shares. However, in 2017, Maran filed a case in the Delhi High Court alleging that SpiceJet never issued the convertible warrants and preference shares or returned the invested funds.
Still, an arbitral tribunal, created in 2016 on the orders of Delhi High Court to adjudicate the share transfer dispute, held that there was no breach of the share sale and purchase agreement, according to the Indian legal news site Verdictum. The tribunal directed Maran to pay INR290 million (USD3.5 million) as a penalty and interest to Singh and the airline, while Singh was instructed to refund the INR5.79 billion with interest.
