The arbitral award against Spicejet in favour of the company’s former promoter, Kalanithi Maran, is upheld by the Delhi High Court.
Title: SpiceJet Limited v. Kal Airways Pvt Ltd & Ors.
Decided on: 31st July, 2023
+ O.M.P. (COMM) 42/2019 & I.A. 1281/2019CORAM: HON’BLE MR. JUSTICE CHANDRA DHARI SINGH
Introduction
The Delhi High Court recently dealt with two appeals challenging an arbitral award dated July 20, 2018, which directed SpiceJet’s Promoter and Chairman Ajay Singh to refund Rs. 308 crore towards warrants and Rs. 270 crore towards cumulative redeemable preference shares (CRPS) along with interest to Kal Airways and Kalanithi Maran. The Court also considered Maran’s appeal for damages of Rs. 1,323 crore from SpiceJet. The case revolved around the interpretation of the arbitration agreement and whether the arbitral award suffered from patent illegality or was against public policy.
Facts
The disputes between the parties arose concerning an Agreement concerning their financial obligations. The respondents invoked the arbitration clause stipulated in the Agreement for resolution. The petitioners argued that the entire amount of Rs. 370 crores, meant to be brought into their company as committed support, was to remain with the airline for eight years as per the Agreement’s terms. They contended that the Arbitral Tribunal had no authority to rewrite the contract by ordering the return of Rs. 270 crores and altering the transaction’s nature.
Analysis
The Delhi High Court, while considering the limited grounds under Section 34 of the Arbitration and Conciliation Act, 1996, to challenge an arbitral award, refused to interfere with the award. The Court emphasized that it could only intervene if there was an error apparent on the face of the record or if the award suffered from patent illegality or was against public policy. The Court examined the findings of the Arbitral Tribunal and concluded that there was no gross illegality or perversity in the award. It held that the conclusions drawn by the Tribunal did not shock the conscience of the Court.
The Court’s analysis highlighted the importance of clear and precise decisions by arbitrators to withstand judicial review. It underscored the principle of minimal judicial interference in arbitral awards, respecting the autonomy and finality of arbitration proceedings.
Held
The Delhi High Court dismissed the appeals challenging the arbitral award and upheld its validity. The Court found no grounds to set aside the award, as it was not patently illegal, against public policy, or fundamentally flawed. The conclusions drawn by the Arbitral Tribunal were deemed acceptable and did not warrant interference by the Court. As a result, the award directing the refund of amounts and interest to Kal Airways and Kalanithi Maran was upheld, while rejecting Maran’s appeal seeking additional damages from SpiceJet.
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Written by- Ankit Kaushik