SpiceJet Failed To Make Out A Case: Delhi HC Upholds Arbitral Award In Favour Of Kal Airways

The bench however, rejected Maran's appeal seeking damages of Rs. 1,323 crore from SpiceJet.

A bench of Justice Chandra Dhari Singh without going into merits of the Award as there was no error apparent on the face of the record or an illegality, observed, “There is nothing in the impugned Award to suggest that it suffers from patent illegality and the findings therein are perverse and will shock the conscience of this Court. In the instant case, the petitioners have not been able to prove that the impugned Arbitral Award is patently illegal, against public policy of India or fundamental policy of law and thus have failed to make out a case for the award to be set aside”.

Senior Advocate Abhinav Vashisht appeared for SpiceJet, Senior Advocates Maninder Singh and Sathanarayanan appeared for Kal Airways

In the matter, disputes arose between the parties pertaining to an Agreement regarding the financial obligation of the parties and for the adjudication and resolution of the same, the respondents invoked the arbitration clause stipulated in the Agreement.

The petitioners had submitted that the entire amount of Rs. 370 Crores, which was to be brought into the petitioner Company as part of the committed support, was to stay with the airline for a period of 8 years as per the terms of the Agreement. Therefore, the Arbitral Tribunal could not have rewritten the terms of the contract by awarding return of Rs. 270 Crores, modifying the nature of the transaction in the Agreement.

However, the limited question before the court was, whether the impugned award in question suffers from patent illegality and/or is in conflict with the public policy or fundamental policy of Indian law and thus is liable to be set aside under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996, warranting interference of this Court.

Considering the limited grounds under Section 34 of the Arbitration Act to challenge an arbitral award, the bench answering in negation upheld the award so granted.

The petitioner were aggrieved by three findings of the Arbitral Tribunal that:

(2) The parties shall explore the possibility of giving effect to and exercise the option as described in detail. In case the efforts do not fortify, the Respondents shall within a period of one month thereafter refund the amount in question i.e., Rs.270,86,99,209/- to the Claimant No.2 (which is arrived at after adjusting the counter claim of Rs.100 Crores which has been allowed).

(3) Since the amount covered by conclusion (1) was with the Respondents since November 2015, they would have become liable to pay interest on the same. Though, interest at the rate of 18% per annum has been claimed, we are of the view that since Respondent No.1 Company took over a huge liability and also paid interest on the tax amount payable by the Claimants, interest at the rate of 12% on Rs.308,21,89,461/- would be appropriate. The amount has to be accordingly calculated for about 30 months. Additionally, in view of the finding relating to the CRPS claim and the proved position that the Respondents have paid interest / servicing charges of around Rs.29 Crores, the counter claim to that extent is allowed.

(5) In case the payments, as directed, to be made by the Respondents are not so made within two months from the relevant date, the Claimants shall be entitled to interest @ 18% from the last date of the due date in terms of this Award.

The High Court, accordingly while stating that the conclusions drawn were not of the nature that could shock the consciences of the Court, observed, “There is also nothing in the Award, even to the aspect of interest, which would lead this Court to take the view that there is any gross illegality which goes to the root of the matter or error apparent on the face of the record which would render the Arbitral Award patently illegal”.

Cause Title: SpiceJet Limited v. Kal Airways Pvt Ltd & Ors. [Neutral Citation: 2013:DHC:5321]