In a relief for cash-strapped SpiceJet, the Delhi High Court on Friday overturned an arbitral award in favour of Kalanithi Maran. A single judge bench had upheld an arbitral award asking SpiceJet and its promoter Ajay Singh to refund Rs 579 crore plus interest to Maran.

A bench of Justices Yashwant Varma and Ravinder Dudeja allowed the appeals filed by Singh and SpiceJet challenging the single judge bench’s July 31, 2023, order.

The development had a positive impact on SpiceJet shares, which closed up 5.46% at Rs 63 on the BSE.

The division bench had earlier refused to stay the single judge’s order and had asked Maran and his company Kal Airways to respond to the appeal.

SpiceJet and Singh’s counsel had earlier argued that the challenge was on the issue of 18% interest, which the tribunal had directed the carrier to pay.

The single judge had upheld the award announced by the arbitral tribunal on July 20, 2018, in favour of Maran and Kal Airways.

It had said the court was barred from entering into the merits of an award unless there was an error that was apparent on the face of the record or an illegality that goes to the root of the matter.

Singh had approached the single judge bench challenging the arbitral award.

The case dates to January 2015, when Singh, who owned the airline earlier, bought it back from Maran after it was grounded for months due to resource crunch.

While the tribunal had asked Maran to pay Singh and the airline Rs 29 crore in penal interest, Singh was asked to refund Rs 579 crore plus interest to Maran.

The tribunal, created in 2016, had held that there was no breach of a share sale and purchase agreement reached between Maran and current promoter Singh in late January 2015.

In a relief to Singh, the tribunal had, however, rejected Maran’s appeal for damages of Rs 1,323 crore from the carrier.

In February 2015, Maran and his investment vehicle, had transferred their 58.46% stake in SpiceJet to Singh for Rs 2 along with Rs 1,500 crore debt liability, after the airline was grounded due to a severe cash crunch.

As part of the agreement, Maran and Kal Airways had claimed to have paid Spicejet Rs 679 crore for issuing warrants and preference shares.

However, Maran approached the Delhi High Court in 2017, alleging SpiceJet had neither issued convertible warrants and preference shares nor returned the money.