Ex-promoter to continue arbitration with SpiceJet

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The Supreme Court has rejected an appeal by SpiceJet against an order requiring it to deposit cash and a bank guarantee totalling ₹5.79 billion (US$90.1 million) in court in connection with a share transfer dispute with former promoter Kalanithi Maran and KAL Airways (KMKAL). The order was made on 3 July by Delhi High Court.

Luthra & Luthra represented KMKAL. “Arbitration (with SpiceJet) shall continue and the firm represents the client in the ongoing proceedings,” said Luthra & Luthra (L&L) partner Anirban Bhattacharya. “L&L drafted the legal notice claiming upon [SpiceJet promoter] Ajay Singh and SpiceJet to perform their part of the share sale and purchase agreement dated 29 January 2015 and successfully represented the clients in section 9 proceedings [under the Arbitration and Conciliation Act, 1996] followed by the section 37 appeal at the division bench and finally in the Supreme Court.”

Before the Supreme Court, SpiceJet argued that the order of deposit, if it remained in effect, would bring about the financial death of the airline and ought to be modified.

KMKAL argued that the single judge and division bench of the high court had balanced equities in the case fairly and secured only a fraction of the amount in dispute. It was urged that as KMKAL’s claim in the ongoing arbitration is above ₹20 billion, the interests of KMKAL ought to be protected and the amount in the order should be secured.

The L&L team also included managing associate Bharat Chugh, senior associates Aditya Vikram and Karan Dev Chopra, and associates Abhishek Gupta and Vibhor Jain. Senior advocates Abhishek Manu Singhvi and Shyam Divan led the arguments for KMKAL, while senior advocates Harish Salve and Mukul Rohatgi argued on behalf of SpiceJet.

The share transfer dispute emerged when KMKAL transferred their entire 58.46% stake in SpiceJet to Singh in February 2015, leading to a change of ownership of SpiceJet. Under the agreement, Spicejet was to issue warrants and preference shares worth ₹6.79 billion to KMKAL. The airline stated it was unable to issue them and cited objections raised by the Bombay Stock Exchange.