Delhi High Court Overturns Order Directing SpiceJet to Refund ₹270 Crore to Kalanithi Maran

New Delhi, India — In a significant legal victory for budget airline SpiceJet, a division bench of the Delhi High Court has overturned a previous order that directed the airline to refund over ₹270 crore to its former promoter Kalanithi Maran of the Sun Group. The bench, comprising Justice Yashwant Varma and Justice Ravinder Dudeja, allowed the appeals of SpiceJet and its chairman and managing director Ajay Singh against the single judge’s order from July 31, 2023.

“Appeals stand allowed. Consequently, July 31, 2023 order is set aside,” stated the division bench. This decision comes after the single judge had upheld an arbitral award requiring SpiceJet to refund ₹270 crore to Kal Airways and Maran. The single bench had previously ruled that the arbitral award did not suffer from patent illegality and that SpiceJet had failed to make a case for setting aside the award.

“There is nothing in the impugned Award to suggest that it suffers from patent illegality & the findings therein are perverse & will shock the conscience of this Court. In the instant case, the petitioners have not been able to prove that the impugned Arbitral Award is patently illegal, against [the] public policy of India or fundamental policy of law & thus have failed to make out a case for the award to be set aside,” the Court had ruled on July 31, 2023.

The dispute traces back to 2015 when Ajay Singh bought back SpiceJet from Kalanithi Maran. As part of the deal, Maran transferred 58.46% of his stake in the airline to Singh for ₹2, with an understanding that Maran would receive redeemable warrants in return for his investment during his tenure as a promoter of the airline.

Maran was supposed to receive 18 crore warrants, which would translate to a 26% shareholding in SpiceJet. However, he did not receive his share of the money, convertible warrants, or preference shares, prompting him to approach the Delhi High Court. Maran claimed damages of over ₹1300 crore in his petition, leading the high court to refer the dispute to arbitration.

In 2018, the arbitral tribunal directed SpiceJet to refund ₹270 crore to Maran. Additionally, the tribunal ordered SpiceJet to pay an interest of 12% per annum on the amounts paid towards warrants and 18% per annum on the sums awarded to Maran if the payment was delayed.

This recent ruling by the Delhi High Court division bench overturns the earlier decision, providing a substantial reprieve to SpiceJet and its management amidst ongoing financial and operational challenges.

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