In an arbitral award dispute, HC asks SpiceJet MD Ajay Singh to appear on January 10
The Delhi High Court has asked low-cost airline SpiceJet‘s Managing Director Ajay Singh to appear before it in January in proceedings relating to a dispute over interest dues on an arbitral award of over Rs.570 crore passed in favour of media baron Kalanithi Maran. “Ajay Singh, the Managing Director, shall remain present on the next date of hearing,” Justice Manoj Kumar Ohri said in the order passed on Monday and listed the matter for further hearing on January 10 next year. Ajay Singh had earlier also appeared before the high court on August 24.
The High Court was informed by senior advocate Maninder Singh, representing Maran’s Kal Airways, that judgment debtors SpiceJet and its MD are liable to pay around Rs.4.40 crore to the decree-holder (Kal Airways). The counsel for SpiceJet, however, disputed the figure and said that the remaining balance dues are Rs.194 crore and that the judgment debtors’ appeal under the Arbitration and Conciliation Act is pending consideration.
Senior advocate Amit Sibal, representing SpiceJet and its MD, submitted that the judgment debtors have offered to issue fresh equity shares in SpiceJet Ltd, equivalent to the amount due to the decree-holder, to discharge their liability under the arbitral award. However, the counsel for Kal Airways said the offer was not acceptable to them. The counsel said the judgment debtor has not shown any bonafide for discharge of the remaining liability under the award.
The High Court was hearing an enforcement petition filed by Maran and Kal Airways seeking enforcement of the arbitral award in their favour. On July 31, the single judge upheld the award announced by the arbitral tribunal on July 20, 2018, in favour of Maran and Kal Airways. It had said the court was barred from entering into the merits of an award unless there was an error that was apparent on the face of the record or an illegality that goes to the root of the matter.
The single judge’s order was challenged before a division bench of the high court which has refused to stay the decision and the appeal is pending there. Singh had approached the single-judge bench of the high court challenging the arbitral award. The case dates back to January 2015, when Singh, who owned the airline earlier, bought it back from Maran after it was grounded for months due to a resource crunch.
While the tribunal had asked Maran to pay Singh and the airline Rs.29 crore in penal interest, Singh was asked to refund Rs.579 crore plus interest to Maran. The tribunal, created in 2016 on the orders of the Delhi High Court to adjudicate the share transfer dispute, had held that there was no breach of a share sale and purchase agreement reached between Maran and current promoter Singh in late January 2015.
In a relief to Ajya Singh, the tribunal had, however, rejected Maran’s appeal for damages of Rs.1,323 crore from the Gurugram-based carrier.
In February 2015, Maran of the Sun Network and Kal Airways, his investment vehicle, had transferred their 58.46 percent stake in SpiceJet to Singh for Rs.2 along with Rs.1,500 crore debt liability, after the airline was grounded due to a severe cash crunch. Singh was the first co-founder of the airline and is now its chairman and managing director. As part of the agreement, Maran and Kal Airways had claimed to have paid SpiceJet Rs.679 crore for issuing warrants and preference shares. However, Maran approached the Delhi High Court in 2017, alleging SpiceJet had neither issued convertible warrants and preference shares nor returned the money.
The low-cost airline Spice Jet was always a politically exposed company. The company was promoted by Ajay Singh, who was a close aide to late Union Minister and BJP leader Pramod Mahajan in 2000. But when the UPA regime came to power in 2004, the Spice Jet was sold to the Maran family of DMK. But in mid-2014, when BJP came back to power, the Maran family dubiously sold to Ajay Singh and later both entered into litigations. Though the company was listed in Stock Exchanges, no intimation of the sale offer was published, and later said that Maran sold the firm for just Rs. TWO, while the share price was more than Rs.125. Though this was a clear violation, the Modi government preferred to keep quiet, and later Marans and Ajay Singh engaged in legal battles the demand more money.[1]
Reference:
[1] SC to consider plea for mediation to settle disputes between SpiceJet Ajay Singh and Maran family – Aug 16, 2022, PGurus.com
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