The Delhi High Court on Monday dismissed a review plea filed by SpiceJet and its promoter, Ajay Singh, challenging an earlier directive to deposit ₹144 crore. This order is part of a long-standing arbitration dispute with Kalanithi Maran and KAL Airways Pvt Ltd. Justice Subramonium Prasad, while rejecting the plea, also imposed costs of ₹50,000 on the airline.
Court Rejects Financial Distress Argument
SpiceJet and Singh had sought a reconsideration of the deposit order, citing financial distress, particularly in light of the ongoing conflict in West Asia and its impact on the airline industry. Senior Advocates Mukul Rohatgi and Amit Sibal, representing the petitioners, argued that the deposit would create significant difficulties for the airline and mentioned potential sovereign credit support under the Emergency Credit Line Guarantee Scheme.
However, the court declined to accept their arguments, noting that the Supreme Court had previously refused similar relief and that the arbitral award was already at the stage of execution. The High Court further stated that the hostilities in February could not be used to SpiceJet's advantage, especially since the Supreme Court had made the award executable in July 2023. The court observed that the airline's financial health had not significantly changed since then and that the ground of financial distress had already been considered.
Senior Advocate Jayant Mehta, appearing for KAL Airways and Maran, opposed the plea, highlighting the Supreme Court's prior rejections and the ₹1 lakh cost imposed on SpiceJet for a similar challenge. He also pointed out that a property offered by Singh for attachment was already encumbered with IDFC Bank.
Background of the Arbitration Dispute
The dispute dates back to 2015 when SpiceJet faced severe financial difficulties. Kalanithi Maran and KAL Airways, then majority shareholders, agreed to transfer their 58.46% stake to Ajay Singh for a nominal consideration of ₹2 as part of a broader financial support package, including warrants and preference shares, totaling approximately ₹450 crore.
Subsequent disagreements arose over the fulfillment of reciprocal obligations, particularly the non-issuance of warrants. In July 2018, a three-member arbitral tribunal directed SpiceJet and Singh to refund ₹308.21 crore to Maran and KAL Airways, plus 12% annual interest from November 2015. Both parties have since challenged aspects of this award, while enforcement proceedings have continued in parallel.