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Informist, Friday, Jul 26, 2024

 

--SC OKs HC order for fresh hearing in SpiceJet-Maran arbitral case 

--CONTEXT: HC set aside order upholding arbitral award favouring Maran 

 

NEW DELHI – The Supreme Court today refused to interfere with a Delhi High Court division bench order that rejected a 2018 arbitral award asking SpiceJet Ltd and its Chairman and Managing Director Ajay Singh to refund 5.79 bln rupees, along with interest, to its former promoter Kalanithi Maran.

 

The top court upheld the division bench order asking the single judge of the high court to decide on SpiceJet's petition opposing the arbitral award afresh, bearing in mind the bench's observation.

 

"We will not interfere. We will let it go back to the single judge..." said the bench, led by Chief Justice of India D.Y. Chandrachud. "All that we can say about single judge is--filling up 250 pages is not writing a judgement under Section 34 (of Arbitration and Conciliation Act, 1996). This is atrocious... This is not the way to write an order under Section 34. Where has he (single judge) even applied his mind? We are in agreement with the reasoning of the division bench sending it back to a single judge for order again under Section 34. Order has to be carefully articulated," said Chief Justice Chandrachud.

 

Maran and KAL Airways, in its petition, said the division bench of the high court had exceeded its jurisdiction by directing fresh consideration of the challenge to the arbitral award. The division bench had failed to appreciate that the single judge had duly considered the arbitral award and found it not vitiated by any perversity or "patent illegality" and ought not to have interfered with the judgement. 

 

In an order passed on May 17, the division bench of the high court said, "We are consequently compelled to dispose of these appeals in terms which follow principally since the learned Single Judge has erred in dismissing the Section 34 (of the Arbitration and Conciliation Act, 1996) petitions without according due consideration to the challenge which was raised and an apparent absence of reasoning in support of the decision arrived at."

 

In 2018, KAL Airways and Kalanithi Maran were awarded a refund of 3.08 bln rupees towards warrants, and a refund of 2.71 bln rupees towards cumulative redeemable preference shares. In addition, KAL Airways and Maran were awarded interest of 12% till the petition was pending, and an 18% post-award interest, in case the payments directed to be made by SpiceJet and its Chairman and Managing Director Ajay Singh were not completed within two months from the date of the award.  

 

On Jul 31 last year, a single judge bench of the high court had rejected SpiceJet's petition against the arbitration award to pay Maran 5.79 bln rupees along with interest in the case involving the transfer of shares by Maran to Singh. Justice Chandra Dhari Singh had also rejected Maran's plea seeking 13.23 bln rupees in damages from the airline.

 

Thereafter, SpiceJet and Singh moved the division bench against the tribunal's direction for refund of 2.71 bln rupees towards cumulative redeemable preference shares and the interest rates of 12% and 18%. "We are constrained to observe that the arguments which were addressed in challenge to the award of refund have been summarily and abruptly brushed aside with the learned Single Judge merely observing that the 'course of procedure' as adopted by the arbitral tribunal cannot be said to in contravention of the provisions of the Act or any other substantive law," the division bench of the high court had said.

 

Maran and KAL Airways had transferred their entire 58.46% stake in SpiceJet to co-founder Singh in February 2015. Maran later moved court, accusing SpiceJet and Singh of breaching their agreement by failing to issue him 189 mln share warrants and preference shares. KAL Airways is controlled by Maran. In 2016, the Delhi High Court held that Maran was eligible to receive 5.79 bln rupees, but referred the dispute to an arbitration panel. At 1250 IST, the shares of SpiceJet were up 2.8% at 58.78 rupees on the BSE.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Aditya Sakorkar

 

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