SC directs SpiceJet to pay entire arbitration award of Rs 380 cr to Maran

The Supreme Court on Friday told low-cost carrier SpiceJet to pay the entire arbitral award of Rs 380 crore to former promoter Kalanithi Maran and observed that businesses must be carried out with “commercial morality”.

A Bench of Chief Justice of India D Y Chandrachud and Justice P S Narasimha dismissed the applications filed by the airline, seeking an extension to pay Rs 75 crore to Maran’s Kal Airways as directed under the apex court’s order of February 13.

“If orders are not complied with, consequences must follow. That’s the only way to ensure commercial morality,” the court said.

The court had in February directed SpiceJet to pay Rs 75 crore against Maran’s claim of Rs 362.49 crore (plus interest dues) within three months under the 2018 arbitration award.

The court had made it clear in its order that if SpiceJet failed to pay, the entire award would become payable to Kal Airways and Maran.

SpiceJet sought an extension of two more months as the three-month period had expired on May 13.

The court, dismissing the submissions of Senior Advocate Mukul Rohatgi, appearing for SpiceJet, said this was nothing but a dilatory tactic by SpiceJet to avoid payment.

“The battery of lawyers is involved in all this and you know the idea is just to delay complying with the orders of the court ... The writ of the court has to be complied with and now, they (the Delhi High Court) will execute the award,” the Bench said.

Senior Advocate Maninder Singh, appearing for Kal Airways, submitted that SpiceJet was not honouring the orders of any of the courts.

The Delhi High Court on May 29 had ordered SpiceJet to pay Rs 380 crore to Maran and asked the airline to submit an affidavit of assets within four weeks.

Kal Airways had argued SpiceJet had failed to comply with the Delhi High Court order of November 4, 2020, by not filing the affidavit of assets.

Additionally, SpiceJet was directed to pay Rs 242 crore within three weeks of September 2, 2020. It sought to modify this order, but its application was rejected. It then challenged these orders before the Supreme Court, which directed it on February 13 this year to encash the bank guarantee and pay the specified amount directly to Kal Airways.

SpiceJet was also required to pay an additional amount of Rs 75 crore within three months as interest.

Singh had told the high court that the Rs 75 crore had not been deposited, resulting in an increased interest of Rs 380 crore. Therefore, Kal Airways had insisted on compliance with the order passed by the Supreme Court, he said.

Senior Counsel Sandeep Sethi, representing SpiceJet, said the airline had paid a principal amount of Rs 579.08 crore and had applied to the Supreme Court for a three-month extension to pay Rs 75 crore.

Sethi requested the Delhi High Court not to direct SpiceJet to deposit the balance.

Singh, meanwhile, argued the timeline for paying the interest had been determined by the Supreme Court, and so the Delhi High Court had no authority to extend it.

Dhiraj Mhetre, partner, Khaitan Legal Associates, said it would be important to see the impact of this order on the insolvency applications pending against SpiceJet.

“This order of the Supreme Court will add to the financial constraints of the airline,” he said.

“The present order of the Supreme Court is a reiteration of its earlier order passed in February. The main petition challenging the award by both parties is pending disposal by the Delhi High Court. The matter relates to the payment of interest on a principal amount of Rs 579 crore, which has already been paid. SpiceJet is engaged in talks with Kalanithi Maran and his firm Kal Airways and remains committed to finding an amicable settlement. We remain confident of resolving this to the satisfaction of both sides through discussions,” said the SpiceJet spokesperson.