SpiceJet-KAL Airways Dispute: Supreme Court Directs Fresh Consideration Of Arbitral Award

The Supreme Court upheld on Friday an order of a division bench of the Delhi High Court that remanded the arbitration dispute between SpiceJet Ltd.'s Ajay Singh and KAL Airways' Kalanithi Maran back to the single judge.

The top court said the single judge passed the order without an application of mind and that the division bench was right in sending the matter back to a single-judge bench.

Observing that the single judge's order refusing to interfere with the arbitral award in favour of Maran was "atrocious", the apex court said the matter must be remanded back to a different single judge bench for a fresh consideration.

The case dates back to 2015, when Singh, the chairperson and managing director of SpiceJet, took over SpiceJet from KAL Airways and Maran.

The arrangement included provisions for Maran and KAL Airways to receive warrants and preference shares, which were, however, never issued. In 2018, an arbitral tribunal ruled in favour of Maran, awarding him Rs 579 crore along with interest.

The tribunal dismissed Maran's claim for Rs 1,323 crore in damages for the non-issuance of warrants but agreed to a refund of Rs 579 crore plus interest.

A single judge bench of the Delhi High Court had given its stamp of approval to the arbitral tribunal's decision in 2023.

In an appeal before the division bench, the challenge stood confined to the direction framed by the arbitral tribunal for a refund of an amount of Rs 270 crore paid by KAL Airways and Maran for issuance of the non-convertible redeemable preference shares, the imposition of 12% interest pending on warrants as well and the post award interest at the rate of 18%.

The division bench agreed to set aside the direction to refund Rs 270 crore to KAL Airways and Maran, bringing relief to the low-cost airline SpiceJet. The bench also remanded the matter back to a single-judge bench for a fresh consideration as it hinted at a "patent illegality" in the award.