SpiceJet vs Kalanithi Maran: Supreme Court Upholds Delhi HC Decision in Share Transfer Dispute, Orders Reconsideration of Arbitration Case

In a relief for financially struggling SpiceJet, the Supreme Court upheld a Delhi High Court decision on Friday. The High Court had sent a 2018 arbitration case back to a single judge for reconsideration. The Supreme Court stated that the single judge “had not applied his mind” in a seven-year-old share transfer dispute between SpiceJet and its former promoter, Kalanithi Maran.

Background of the Case

In July last year, the single judge of the High Court had upheld an arbitral award requiring SpiceJet and its Chairman and Managing Director, Ajay Singh, to refund Rs 579 crore plus interest to Maran. However, in May this year, a division bench sent the arbitration dispute back to the single judge.

Arbitral Tribunal’s Decision

On July 20, 2018, the arbitral tribunal rejected Maran’s claim for damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore with interest.

Supreme Court’s Ruling

A bench led by Chief Justice DY Chandrachud agreed with the division bench’s decision to send the case back for reconsideration, stating that the single judge had not adequately considered the case. The Chief Justice emphasized that simply writing a lengthy judgment was insufficient; it also needed proper reasoning. The Supreme Court asked the Delhi High Court Chief Justice to assign the case to a different single judge for fresh consideration.

SpiceJet’s Response

SpiceJet welcomed the Supreme Court’s decision to dismiss the appeal filed by Maran and KAL Airways, which challenged the Delhi High Court division bench ruling in favor of the airline. SpiceJet’s statement expressed satisfaction with the decision and mentioned plans to pursue a refund of Rs 450 crore, which would strengthen the airline’s financial position and support further expansion.

Maran’s Appeal

Maran and KAL Airways argued in their appeals that the division bench had overstepped its authority by ordering a fresh review of the arbitral award. They contended that the single judge had adequately considered the arbitral award and found no errors or “patent illegality,” and therefore, the division bench should not have interfered with the judgment.

Share Transfer Dispute

The case stems from a share transfer dispute between SpiceJet’s Chairman and Managing Director, Ajay Singh, and Maran and his KAL Airways. In February 2015, Maran and KAL Airways transferred their entire 58.46% stake in the airline to Singh. In 2017, Maran and KAL Airways went to court demanding that 180 million warrants redeemable as equity shares be transferred to them. The court asked both parties to settle the share transfer dispute through arbitration on July 29, 2016.