Delhi HC rejects SpiceJet’s review plea against ₹144 crore deposit order

New Delhi: The Delhi High Court on Monday dismissed pleas by SpiceJet and promoter Ajay Singh seeking a review of an earlier order directing the airline to deposit ₹144 crore in its long-running arbitration dispute with Kalanithi Maran and KAL Airways Pvt Ltd. Justice Subramonium Prasad also imposed costs of ₹50,000.

The court declined to accept SpiceJet's offer to provide a property belonging to Singh for attachment in place of the deposit. It directed the airline and Singh to deposit the remaining amount within four weeks, after noting that the Supreme Court had already refused similar relief and that the award was already at the stage of execution.

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SpiceJet and Singh had sought reconsideration of the earlier direction on the ground of financial distress. Appearing for them, Senior Advocates Mukul Rohatgi and Amit Sibal submitted that a deposit of ₹144 crore would create difficulties for the airline, particularly in view of the war in Iran and its effect on the airline industry amid the wider West Asia conflict. Rohatgi also said the Centre was in the process of granting sovereign credit under the Emergency Credit Like Guarantee Scheme to cushion the effect of the West Asia war on the airline industry, and submitted that an endeavour would be made to sell the property.

Senior Advocate Jayant Mehta, appearing for KAL Airways and Maran, opposed the plea and said the Supreme Court had already rejected such requests by SpiceJet. He pointed out that the top court had also imposed costs of ₹1 lakh while dismissing SpiceJet's challenge to the direction to deposit ₹144 crore. Mehta further submitted that Singh's Gurugram property was encumbered with IDFC Bank.

In its order, the High Court said the hostilities that broke out in February could not be used to the advantage of SpiceJet and Singh when the Supreme Court had made the arbitral award executable in July 2023. The court said the airline's 'declining' financial health had not changed since then and that the ground of financial distress had already been considered earlier. It observed that the petitioners were trying to take advantage of an event that took place more than two years after the apex court's order, and said they were 'constantly disobeying the orders of the apex court'. The court also said that, after earlier indulgence, the petitioners were now 'only abusing the indulgence' granted to them.

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The dispute goes back to 2015, when SpiceJet was facing severe financial distress and the risk of shutting down operations. Maran and KAL Airways were then the promoters and majority shareholders of the airline, holding a 58.46 per cent stake. Under a share sale and purchase agreement entered into in 2015, they agreed to transfer their entire shareholding, amounting to 35.04 crore equity shares, to Ajay Singh for a nominal consideration of ₹2. The arrangement was linked to a broader financial support package involving warrants, cumulative redeemable preference shares and an overall funding commitment of about ₹450 crore.

Disputes later arose over the performance of reciprocal obligations under the agreement, including 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, along with interest at 12 per cent per annum from November 2015. Both sides then filed challenges under Section 34 of the Arbitration and Conciliation Act, 1996, while enforcement proceedings continued in parallel.