On Thursday, the Madras High Court prolonged an interim stay on the implementation of a single judge’s judgement ordering the insolvency of SpiceJet for non-payment of $24 million to a Switzerland-based stock corporation Credit Suisse AG until January 11.
Justices Paresh Upadhyay and Sathi Kumar Sukumara Kurup convened a division bench to adjourn the case until January 10. According to the statement, the interim stay will be in effect until January 11.
SpiceJet complied with the single Judge’s order to remit $5 million, which enables it to go for appeal.
Spicejet has filed an appeal against the single Judge R Subramanian’s December 6 verdict, which ordered the private carrier’s closure of operations and authorised the Official Liquidator attached to the High Court to take over its assets.
SpiceJet had miserably failed to satisfy the three-pronged test suggested by the Supreme Court in a similar case before and had rendered itself liable to be wound up for its inability to pay its debts under Section 433 (e) of the Companies Act 1956. Considering the circumstances, the Court had held on December 6 while allowing a company petition from Credit Suisse AG, the stock corporation registered under the laws of Switzerland.
SR Technics had requested that SpiceJet be wound up under the Companies Act, 1956 and that the Official Liquidator of the High Court be appointed as SpiceJet’s Liquidator, with all powers under Section 448 of the Companies Act to take charge of the company’s assets, properties, stock in trade, and books of accounts.
SpiceJet vs SR Technics
SpiceJet, a budget airline, used the services of SR Technics in Switzerland for maintenance, repair, and overhauling of aircraft engines, modules, components, assemblies, and parts required for its operations, according to the petitioner. SpiceJet and SR Technics signed a 10-year deal on November 24, 2011, to provide such services. The parties also agreed upon payment arrangements. A supplemental agreement was also signed on August 24, 2012, to amend certain of the conditions of the original contract.
Extension of time for payment of money due under various invoices created by SR Technics and a delayed payment arrangement were among the revisions. As a result of the general cost increase, the 2012 supplemental agreement included adjustments to flying hour rates as well as escalation clauses. The petitioner has asked SpiceJet to pay the various invoices on several occasions.
The petitioner submitted a statutory notice after failing to honour its commitments under the agreements with SR Technics and failing to meet its financial obligations. Due to the lack of reaction, the firm filed a petition in the High Court to wind up SpiceJet, which was granted. SpiceJet, enraged, preferred the appeal.
SpiceJet claimed that in 2011, it signed a 10-year agreement with the Swiss business. However, in the middle of the investigation, the aircraft maintenance company did not have a valid Director General of Civil Aviation licence between January 1, 2009, and May 18, 2015.
Termination was not a condition of employment. When SpiceJet learned about the situation, it halted payments. According to the appeal, there was no finding in the arbitral ruling that the air carrier was aware of the non-approval even before agreeing, and an “illegal demand” for dues would not fall under the concept of “debts” defined in the Companies Act.