Companies

SpiceJet: HC rejects appeal against wind-up, allows time to approach SC

Our Bureau | | Updated on: Jan 11, 2022
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Madras High Court ordered airline’s liquidation over non-payment of $24 mn to Credit Suisse

A division bench of the Madras High Court (MHC) on Tuesday dismissed an appeal by SpiceJet against a single judge’s order to wind up the company for non-payment of $24 million to Credit Suisse AG, the Zurich-based stock corporation. However, the bench, consisting of Justice Paresh Upadhyay and Justice Sathi Kumar Sukumara Kurup, stayed this order till January 28 to enable the airline to appeal further in the Supreme Court.

On December 7, the single bench had directed the official liquidator to take over the assets of the carrier. However, after pronouncing the order, the judge stayed it for three weeks, subject to the condition that the company deposits $5 million within two weeks.

SpiceJet challenged the single bench’s order on liquidating its assets, arguing that it was erroneous and against the weight of evidence.

SpiceJet: Madras HC extends stay on single judge order till Jan 11

The division bench on Monday heard the arguments of both parties, and pronounced its order on Tuesday.

Maintenance row

The proceedings before MHC arose out of an agreement dated November 24, 2011, between SpiceJet and SRT Technics (SRT) for engine maintenance services. Credit Suisse initiated the company petition as a purported assignee of SRT, claiming non-payment of $24.01 million under the agreement.

Auditors cast doubts over SpiceJet’s ability to continue as a going concern

SpiceJet opposed the petition on the grounds that there was no legally enforceable debt because SRT did not possess the Directorate General of Civil Aviation (DGCA) approval for provision of services under the agreement. It alleged SRT made a fraudulent misrepresentation of having the DGCA approval.

The airline raised a bona fide dispute, claiming that the provision of engine maintenance without DGCA approval is contrary to Indian and other applicable laws and voids the entire agreement. Hence Credit Suisse, as an assignee, does not and cannot have any claim against the company, said an earlier statement by the company.

The single bench, despite holding that SRT did not have a valid authorisation from DGCA to carry out engine maintenance during the currency of the agreement, rejected SpiceJet’s defence and ordered the winding up of the company and takeover of its assets.

Published on January 11, 2022

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