Delhi High Court: Deciding the petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996 to preserve the subject-matter of the disputes arising on failure of the respondents to honour their contractual obligations under the Share Sale and Purchase Agreement dated January 29, 2015, the Court directed the parties to take necessary steps towards constitution of an Arbitral Tribunal to settle the disputes.
During 2013-15, the respondent company was facing severe difficulties in maintaining its fleet, staff and operational integrity. Loans were extended by the petitioners which sum was to be adjusted towards issue of warrants. The petitioner contended having paid a sum of Rs 679 crores to the respondent and that the current management under Ajay Singh was not issuing 189 million convertible warrants as agreed. The petitioners sought orders restraining the respondents from allotting/transferring/alienating or creating any third party interest on any of the shares of the company and also to deposit in the Court the value of the shares due to the petitioners against the warrants and CRPS shares. Both the petitioners claimed to have paid the entire amount towards their contractual obligation under the binding SPA including the amounts which were dues to the statutory authorities whereas the respondents had failed to honour even a single contractual commitment.
The Bombay Stock Exchange and SEBI contended that in light of the SEBI ICDR Guidelines, the warrants cannot be issued in the prevailing facts and circumstances. BSE submitted that the transfer of shares could be made only on a fresh resolution issued by the company.
Disposing of the petitions, the Court directed Spicejet to deposit Rs 579 crores without prejudice in five equal instalments by way of fixed deposit for twelve months in the name of the Registrar General of the Court. The first instalment amount shall be deposited by the respondents on or before 7th August, 2016. Thereafter, the remaining instalments shall be deposited on every succeeding month. Till the time all five instalments are deposited, the interim order shall continue. As and when the amount is deposited, the petitioners would be at liberty to file the application for releasing of amount, the same would be considered on merit as well as the issue of interim orders. The Court held that once the Tribunal is constituted, it is expected that it would publish the award within a period of twelve months. Liberty is also granted to move an application under Section 17 of the Act before the Arbitral Tribunal if so necessary or under any change of circumstances. [Kal Airways Pvt. Ltd. v. Spicejet Ltd., 2016 SCC OnLine Del 4202, decided on July 29, 2016]