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Supreme Court directs SpiceJet to pay former promoter

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Published on: 09 July 2023 at 12:35 IST

Supreme Court Directs SpiceJet to Pay Full Arbitral Award to Former Promoter Kalanithi Maran, Emphasizes Importance of Commercial Morality

In a recent ruling, the Supreme Court of India has instructed low-cost carrier SpiceJet to fulfill its obligation of paying the complete arbitral award, amounting to approximately 380 crore, to former promoter Kalanithi Maran. The court highlighted the need for conducting business activities with “commercial morality.” The bench, consisting of Chief Justice of India D Y Chandrachud and Justice P S Narasimha, rejected SpiceJet’s applications seeking an extension to pay 75 crore to Kal Airways, as directed in the court’s previous order from February 13.

Emphasizing the significance of compliance with court orders, the bench stated that consequences must follow if orders are not adhered to, as it is the only way to ensure commercial morality. In February, the court had initially instructed SpiceJet to pay 75 crore within three months to settle Maran’s claim of 362.49 crore (plus interest dues) based on a 2018 arbitration award. The court had explicitly mentioned that failure to comply would result in the entire award becoming payable to Kal Airways and Maran.

SpiceJet sought a two-month extension as the three-month period expired on May 13. However, the court dismissed the airline’s plea, deeming it a dilatory tactic to evade payment. The bench highlighted the involvement of a battery of lawyers in the matter, expressing the need for compliance with court orders and stating that the Delhi High Court would now execute the award.

Senior Advocate Maninder Singh, representing Kal Airways, argued that SpiceJet had disregarded the orders of all the courts involved. On May 29, the Delhi High Court had ordered SpiceJet to pay 380 crore to Maran and requested the airline to submit an affidavit of assets within four weeks. Kal Airways contended that SpiceJet had failed to comply with the Delhi High Court’s order from November 4, 2020, by not filing the affidavit of assets. Furthermore, SpiceJet was directed to pay 242 crore within three weeks of September 2, 2020. Although SpiceJet attempted to modify this order, its application was rejected. Subsequently, the airline challenged these orders before the Supreme Court, which then directed it on February 13 of this year to encash the bank guarantee and make the specified payment directly to Kal Airways. Additionally, SpiceJet was required to pay an interest of 75 crore within three months.