The court found that the appellants failed to fulfill their contractual obligations under the Share Sale and Purchase Agreement, and directed them to deposit Rs. 579 crores in court to preserve the claimed losses, pending arbitration.

S. RAVINDRA BHAT, J.

1. The appellants, under Section 37 of the Arbitration and Conciliation Act, question the order of a learned single judge under Section 9, directing them to deposit Rs.579 crores in court. The respondents to this appeal moved the applications (hereafter referred to as “the petitioners”).

2. The petitioners were the shareholders of SpiceJet, the original first respondent (hereafter called “the company” or “SpiceJet”) owning 35,04,28,758 equity shares, constituting 58.46% of the share capital of which 26,73,70,826 Equity Shares were free from all encumbrances and 8,30,57,932 equity shares were encumbered with different lenders. In 2013-2015, SpiceJet faced acute financial crisis that caused it difficulties in maintenance of its fleet, staff and operational integrity. The petitioners wished to revive the company and bring it back to the path of financial health. By a Loan Agreement dated 18.12.2013 (hereinafter "First Agreement"), Rs. 75,00,00,000/- (Rupees Seventy Five Crores only) was given by the petitioner to the company. This amount was later reduced by another agreement (dated 07.11.2014) by which parties agreed to reduce the amount of Rs. 10,40,83,830/- (Rupees ten crore forty lakh eighty three thousand eight hundred and thirty only) from the loan amount provided under the First Agreement and utilize that sum towards the payment of exercise of option attached to 1,91,69,000 warrants issued on preferential basis to the Petitioner by the company. Accordingly, the outstanding loan amount under the First Agreement stood at Rs.64,59,16,170/- (Sixty Four Crore Fifty Nine Lakh Sixteen Thousand One Hundred and Seventy only). Later, another loan of Rs. 1,14,00,00,000/- (Rupees One Hundred and Fourteen Crores only) was given by the petitioner to the company by loan Agreement dated 21.11.2014 (hereinafter "Second Agreement").

3. Through a Board of Directors resolution of the company on 21.08.2014 the warrants were to be issued "in accordance with Regulation 76 of the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 ..." (hereafter “SEBI Disclosure Regulations”). As a result, the company applied to the Bombay Stock Exchange (BSE). The company was still under the control and management of the Petitioner and KAL Airways Private Limited. The general meeting of the company had approved the issuance of the warrants at a conversion price of Rs. 16.30 per Equity Share. The resolution also recorded that the issuance of Warrants would be in accordance with the SEBI Disclosure regulations. On 15.01.2015 the company presented a scheme to the Ministry of Civil Aviation for transferring of shares from the Petitioner and KAL Airways Private Ltd.(hereinafter "KAL") to the appellant. On 22.01.2015 the Civil Aviation ministry approved the scheme of reconstruction and revival for takeover of the ownership, management and control of SpiceJet Ltd (hereafter "the Scheme").

4. After discussions and with a view to restore operations and regain the company’s market position, the petitioners had agreed to transfer their shares and the appellant agreed to acquire them. The Sale Purchase Agreement ("SPA") was executed between both the petitioners and the appellants on 29.01.2015.By the SPA, the appellant had acquired 35,04,28,753 equity shares in the company i.e. 58.46% share capital of both petitioners, i.e. Kalanithi Maran and KAL Airways Pvt. Ltd. in SpiceJet by paying Rs. 2 (two). Each share of the company was around Rs.16.30/- at the time of entering into the SPA (the value of the said equity shares was about Rs.765 crores at that time) subject to the terms that the payments also included the adjustments of the advances monies provided to SpiceJet by the Petitioner and KAL Airways Pvt Ltd under the loan agreements dated 18.12.2013 and 21.11.2014 and loan amendment agreements dated 07.11.2014, 05.12.2014 and letters dated 29.01.2015 issued by the petitioner to the company. This position was not disputed by the a