In a jolt to low-cost airlines SpiceJet, the Supreme Court on Friday refused to extend the time for making payment to media baron Kalanidhi Maran and his Kal Airways in pursuance of an arbitral award of INR 578 crore related to a share-transfer dispute, saying these are “luxury” litigations. While refusing to extend the time, the Delhi High Court had on June 1 directed SpiceJet to deposit “forthwith” INR 75 crore that has to be paid to Maran and his Kal Airways towards interest on the arbitral award.
Prior to this, the top court had ordered that the bank guarantee of INR 270 crore furnished by SpiceJet to Maran and his firm must be encashed immediately if the airlines failed to pay INR 75 crore towards interest on the arbitral award by May 13.
A bench of Chief Justice D Y Chandrachud and Justice P S Narasimha on Friday did not accept the vehement submissions of senior advocate Mukul Rohatgi, appearing for SpiceJet, and refused to the extend the time, saying the entire award has now become executable.
“The battery of lawyers is involved in all this and you know, the idea is just to delay complying with the orders of the court. I personally will not approve this… The writ of the court has to be complied with and now, they (the Delhi High Court) will execute the award,” the CJI said.
At the outset, senior advocate Maninder Singh, appearing for Maran and his Kal Airways, said that nothing has been paid after the Supreme Court asked them to pay INR 75 crore as interest and no indulgence be granted to them in the form of extension of time.
Singh, appearing through Karanjawala and Company, said SpiceJet has earlier also failed to comply with the order of the high court directing it to file an affidavit disclosing assets. “INR 75 crore is not a small amount,” the lawyer of SpiceJet said.
“But then these are not small parties either… These are all luxurious litigations. No further extension of time can be granted and the award becomes executable,” it said.
On November 2, 2020, the high court had asked the airline to deposit around INR 243 crore as interest in connection with the share transfer dispute with its former promoter, Maran, and Kal Airways. On November 7, 2020, the top court stayed the high court order.
In another development, SpiceJet announced that it has entered into a settlement agreement with Nordic Aviation Capital (NAC) regarding their Q400 aircraft. This agreement has cleared all past liabilities and has paved the way for the return and induction of three additional planes into the SpiceJet fleet. This move will help the airline to continue to build its fleet and expand its business.
On February 13 this year, the apex court said the bank guarantee of INR 270 crore of SpiceJet must be encashed immediately and the money be paid to Maran and Kal Airways towards dues from the arbitral award.
It said it had directed SpiceJet to pay within three months INR 75 crore to Maran and Kal Airways towards the interest component on the arbitral award. However, on May 29, the high court was informed that SpiceJet has not paid the interest amount.
SpiceJet and its promoter Ajay Singh were asked to deposit around INR 243 crore as interest payable on INR 578 crore, which the high court had, in 2017, asked the airline to deposit under the 2018 arbitration award in the share-transfer dispute.
The high court had granted six weeks to SpiceJet to make the payment and the deadline for the same expired on October 14, 2020. After this, Maran and his firm had moved the high court for attachment of the entire shareholding of Singh in Spicejet and taking over the management for non-payment of INR 243 crore.
The top court had taken note of Spicejet’s appeal and passed the interim order, staying the high court order. Maran and Kal Airways had moved the high court over the share-transfer dispute, with SpiceJet demanding that 18 crore warrants redeemable as equity shares be transferred to them.
The high court had directed SpiceJet and Singh to deposit INR 578 crore in the high court’s registry.
SpiceJet was permitted to furnish a bank guarantee for INR 329 crore and make a cash deposit of the remaining sum before the high court. The apex court had, in July 2017, dismissed SpiceJet’s appeal against the high court order.
With the busy summer travel season arriving, only 61 per cent of SpiceJet’s flights departed on time from the country’s four biggest airports — Mumbai, Delhi, Bengaluru and Hyderabad — in May, according to the Directorate General of Civil Aviation. That’s down from the already trailing figure of nearly 70 per cent in April, the agency’s data showed.
On July 20, 2018, the arbitral tribunal rejected Maran’s claim of damages of INR 1,323 crore for not issuing the warrants to him and Kal Airways but had awarded him a refund of INR 578 crore plus interest. Maran, the owner of Sun TV Network, then moved the high court against the arbitration award.
The matter pertained to a dispute arising out of the non-issuance of warrants in favour of Maran after the transfer of ownership to Singh, the controlling shareholder of SpiceJet. The dispute started after Singh took back control of SpiceJet in February 2015 amid the airline facing a financial crisis.
Maran and Kal Airways had transferred their entire INR 35.04 crore equity shares in SpiceJet, amounting to a 58.46 per cent stake in the airline, to its co-founder Singh in February 2015 for just INR 2.
