The fundamental question at hand is whether SpiceJet's non-issuance of share warrants and preference shares, despite the contractual obligation and the deposited funds, constitutes a breach of the 2015 agreement with Kalanithi Maran and Kal Airways.
In the recent case of SpiceJet Limited v. Kal Airways Pvt Ltd & Ors, the Delhi High Court denied SpiceJet's request to stay a single judge's order upholding an arbitral award. The judgment mandates SpiceJet and its promoter Ajay Singh to refund Rs. 579.08 crores plus interest to Kalanithi Maran. The court, comprising Justice Yashwant Varma and Justice Dharmesh Sharma, dismissed SpiceJet's plea on July 31. SpiceJet's appeal has been noted, with the court listing the matter for further hearing on October 31. Failure to path specified amount by September 10 may lead to the attachment of SpiceJet and Singh's properties.
The conflict arose from a "Share Sale and Purchase Agreement" made in 2015 between Maran, his firm, and SpiceJet. Under this agreement, Maran sold his 58.46% stake in SpiceJet to co-founder Singh. Maran alleged that SpiceJet breached the share transfer agreement by not issuing share warrants and preference shares, despite Maran depositing Rs. 679 crores with SpiceJet.
The primary issues revolved around the breach of the share transfer agreement. Maran contended that SpiceJet's failure to issue share warrants and preference shares constituted a violation. Conversely, SpiceJet disputed Maran's claims, leading to the arbitration.
The Arbitral Tribunal's decision, upheld by the single judge, favored Maran. The Tribunal ordered a refund of Rs. 579.08 crores, comprising Rs. 308.21 crores for share warrants and Rs. 270.86 crores for Non-Convertible Cumulative Redeemable Preference Shares. The judge dismissed Maran’s plea for damages and restitution of the 58.46% shareholding in SpiceJet.
In conclusion, the court's decision underscores the importance of upholding contractual obligations. SpiceJet and Singh are legally bound to refund the specified amount to Maran and Kal Airways by September 10, failing which their properties might be attached. The case highlights the critical role of precise documentation and adherence to agreements in commercial transactions, emphasizing the legal consequences of non-compliance.