SC affirms Delhi HC's order rejecting claims by KAL Airways, its owner for Rs 1,323 crore

New Delhi: The Supreme Court on Wednesday affirmed a Delhi High Court's order, which rejected KAL Airways and its owner Kalanithi Maran's claim for Rs 1,323 Crore damages against cash-strapped SpiceJet in a long-standing share transfer dispute.

A bench of Justices P S Narasimha and A S Chandurkar dismissed the appeals by KAL Airways and Maran, saying the court was not inclined to interfere in exercise of jurisdiction under Article 136 of the Constitution.

“We find that on the basis of the material on record, the inference drawn by the division bench while refusing to condone the delay cannot be brushed away or that the conclusions drawn were without any basis,” the bench said.

On May 26, the High Court's division bench had come down heavily on KAL and Maran for the delay in filing their appeals, suppressing material facts related to their pending applications and for unjustifiably delaying the proceedings.

It had then observed that Maran, a former promoter of SpiceJet, had engaged in a "calculated gamble" by delaying the filing and re-filing of their appeals. "The delay in refiling is completely lacking in bona fides and represents a gamble by the unsuccessful litigant (KAL Airways) keeping all, including the successful litigant (SpiceJet), in the dark," the HC had said.

In order on the challenge to the HC's decision, the bench said, “While arriving at this conclusion, the division bench was alive to the fact that the approach of the court while dealing with applications for condonation of delay in refiling, was ordinarily to be expansive.” 

The High Court had also noted KAL and Maran’s conduct to be lacking in bona fides, amounting to “fence sitting” and deliberate concealment.

“The case presents a classic example of fence sitting, keeping, in the process, the respondents (Spicejet), the division bench of this court, as well as the Supreme Court, completely in the dark regarding the filing of the present FAOs, and of their languishing under objections,” the High Court had said.

The case concerned the share transfer dispute between SpiceJet chairman Ajay Singh and Maran and his KAL Airways.

In February 2015, Maran and KAL Airways transferred their entire 58.46% stake in the airline to Singh. In 2017, Maran and KAL Airways moved the High Court demanding that 180 million warrants redeemable as equity shares be transferred to them. The court had July 29, 2016 asked both the parties to settle the share transfer dispute under arbitration.

On July 20, 2018, the arbitral tribunal had rejected Maran’s claim of damages of Rs 1,323 crore for not issuing warrants to him and KAL Airways but awarded him a refund of Rs 579 crore with interest.

Both sides challenged the arbitral award and the petitions were dismissed by a single judge of the Delhi High Court in July 2023.

SpiceJet and its chairman Ajay Singh promptly appealed against the dismissal within the statutory 60-day period. Their appeals were heard and in May last year, the division bench found merit in SpiceJet’s contentions and remanded the matter back to the single judge for fresh consideration.

After this, KAL Airways and Maran appealed to the single-judge bench seeking the same amount in damages, which was also rejected. The appeals were found to have been filed after 55 days of delay, which also failed to cure procedural defects for another 226 days.