Madras High Court has issued a winding up order for SpiceJet (SG, Delhi International) and has appointed an official liquidator to take charge of its assets, over a plea that investment bank Credit Suisse filed because of an unpaid debt, the airline confirmed in a Bombay Stock Exchange filing on December 7.
The low-cost carrier had allegedly failed to pay USD24.01 million to the Swiss MRO firm SR Technics for the maintenance and repair of aircraft engines, modules, components, assemblies, and parts under a contract dated November 24, 2011. In September 2012, the MRO firm entered into a financing deal with Credit Suisse under which it assigned all its current and future rights to claim payments. Credit Suisse approached the court in 2015 to plea for payment, arguing that it had made repeated requests to SpiceJet to pay a number of invoices.
SpiceJet admitted in its disclosure that “Madras High Court through its order dated December 6, 2021, has stayed an earlier order of winding up and appointment of an official liquidator for a period of three weeks, subject to the condition that the company deposits an amount equivalent to USD5 million within a period of two weeks.”
SpiceJet said it had opposed the petition on the grounds that “there is no legally enforceable debt because SR Technics did not possess the relevant Directorate General of Civil Aviation (DGCA) approval for the provision of services under the agreement [and] made a fraudulent misrepresentation to the company of having applicable approval to provide the services.”
In response, 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.”
However, the court observed that SpiceJet had anyway chosen to take advantage of the MRO services despite being aware that SR Technics did not possess a valid permit. Nevertheless, the court suspended action on the order so that the cash-strapped budget carrier could have the opportunity to challenge the ruling.
SpiceJet said is was examining the order and would “initiate appropriate remedial steps including preferring an appeal before the appellate jurisdiction within the timeframe allowed” by the court. It added that it “believes it has a good case on merits and is hopeful of having favourable outcome in the appeal.”
