In an interim relief to the budget-career SpiceJet, the Supreme Court has granted three weeks to resolve its financial dispute with Swiss firm Credit Suisse AG. The Court also stayed the verdict of Madras High Court granting permission to wind up its operations and liquidating the airline’s assets.
“If you do not want to run the airline, we will declare you insolvent. This is not the way to run an airline,” Supreme Court said to the airline while declaring its verdict.
Senior Advocate Harish Salve, who appeared for SpiceJet, requested three weeks’ time for trying to resolve the matter. Advocate K V Vishwanathan, who appeared for Credit Suisse AG, agreed to the adjournment. A bench led by the Chief Justice of India, including justices AS Bopanna and Hima Kohli, declared the verdict.
SpiceJet vs Credit Suisse AG
In December 2021, a single bench of Madras High Court ordered winding up SpiceJet in a case where Credit Suisse AG, a Switzerland-based Stock Corporation and Creditor, blamed the airline for not paying the dues of $24 million, pending to the latter. The payment was against the services availed by SpiceJet towards maintenance, repairing, and overhauling of the aircraft engines and components. The single judge Justice R. Subramanian directed the Official Liquidator to take over the company assets.
In January 2022, SpiceJet appealed to a division bench of the Madras High Court to dismiss a single judge’s verdict in the case. The division bench upheld the order of the single judge bench.
SpiceJet had moved the apex court against the order of the Madras High Court’s division bench.
According to SpiceJet, it signed a 10-year agreement with the Swiss business in 2011. However, in the middle of the investigation, SpiceJet found out that the aircraft maintenance company did not have a valid licence from Directorate General of Civil Aviation to deliver the services, between January 1, 2009, and May 18, 2015. Since the termination was not a condition of employment, SpiceJet resumed to halting the pending 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.