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Kalanithi Maran vs SpiceJet: Delhi HC refuses to stay single-judge order upholding arbitral award against airline

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Kalanithi Maran vs SpiceJet: Delhi HC refuses to stay single-judge order upholding arbitral award against airline

spicejet HC order

New Delhi, Aug 24 (IANS)  The Delhi High Court on Thursday rejected interim relief to low-cost airline SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh, who challenged a single-judge order upholding, in favour of Sun Group Chairman Kalanithi Maran and Kal Airways, an arbitral award passed by the tribunal comprising three retired Supreme Court judges.

A division bench of Justices Yashwant Varma and Dharmesh Sharma said that it cannot stay the order dated July 31 in view of the Supreme Court’s direction of February 13 this year.

The court, however, issued notice to Maran and Kal Airways.

On July 31, Justice Chandra Dhari Singh had pronounced the verdict in a section 34 petition filed by the parties in connection with the above-mentioned arbitral award dated July 20, 2018, wherein the decree holders — Kal Airways and Kalanithi Maran — were awarded a refund of Rs 308 crore towards the warrants, as well as a refund of Rs 270 crore towards Cumulative Redeemable Preference Shares (CRPS).

Additionally, they were also awarded an interest of 12 per cent towards pendente lite and an interest of 18 per cent from the last due date, in case the payments directed to be made by SpiceJet and its Chairman and Managing Director (CMD) Ajay Singh are not completed within two months from the date of the award.

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Before the single judge, SpiceJet and Singh had challenged the arbitral award by filing a Section 34 petition, seeking to set aside the refund of Rs 270 crore granted to Kal Airways and Maran.

During the hearing on Thursday, appearing for the airline and CMD, Senior Advocate Amit Sibal submitted that the Section 34 court has failed to consider the challenge of SpiceJet for the payment of Rs 270 crore towards CRPS and have charged an exorbitant amount of 18 per cent towards interest. 

He further requested the bench to consider the stay application praying for the stay on the execution proceedings. 

The bench, however, clarified that they will not go into execution of the award as the same has been directed by the Supreme Court in terms of the order dated February 13 and  July 7 and it will only look into the arguments against Section 34 order. 

Consequently, the court dismissed the application for stay of execution proceedings, and listed the matter for hearing next on October 31.

The airline and CMD had requested the waiver of 12 per cent interest towards warrants and the setting aside of the 18 per cent interest granted under the award for both warrants and CRPS.

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“The Delhi High Court today admitted the appeal of SpiceJet and Ajay Singh and issued notice to Kalanithi Maran and Kal Airways. The court also stated that they would grant an expedited hearing in the matter. We are hopeful for an expeditious resolution of the appeal. We are committed to presenting our matter diligently and respectfully, seeking a just and fair resolution,” SpiceJet spokesperson said.

On the other hand, Kal Airways and Maran also had filed a Section 34 petition, seeking the setting aside of the award to the extent no interest was granted in the amount of Rs 270 crore. They also claimed damages for non-issuance of warrants and CRPS.

The single judge had dismissed the Section 34 petitions filed by the parties. After careful consideration and hearing all arguments, the judge found no valid reason to interfere with the arbitral award.

On July 24, the high court issued notice to SpiceJet Ltd and Singh in Kal Airways and Maran’s application seeking an urgent hearing of its enforcement petition in a case where the former is to pay approximately Rs 390 crore to it towards its interest liability under the arbitral award.

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Allowing the application, a bench of Justice Yogesh Khanna had directed SpiceJet and its CMD to file an affidavit disclosing all their assets before the next date of hearing, September 5, and also mandated the physical presence of Singh before it.

The Supreme Court had, on February 13, directed SpiceJet to pay Rs 75 crore to decree holder (Kal Airways and Maran) within a period of three months towards its interest liability under the arbitral award, and had also clarified that in the event of failure to pay, the entire award would become executable in entirety in favour of decree holder.

Following the top court’s order dated February 13, the high court had on May 29, directed SpiceJet and Ajay Singh to pay the entire executable amount under the award to the decree holder.

On behalf of the Kal Airways Pvt. Ltd. and Kalanithi Maran, Senior Advocate Maninder Singh instructed by Senior Partner Nandini Gore, Principal Associate Sonia Nigam and  Associate advocates Yash Dubey and Akarsh Sharma appeared from Karanjawala & Co.

Senior Advocate Amit Sibal appeared on behalf of Spicejet Ltd. and Mr. Ajay Singh.

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