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HC asks liquidator to take over SpiceJet assets for unpaid dues

A view of the SpiceJet passenger plane. Photo used for representation purpose only.   | Photo Credit: Reuters

The Madras High Court on Monday directed air carrier SpiceJet Limited to wind up the company for non-payment of over $24 million to a Swiss company which maintains, repairs and overhauls aircraft engines, and components.

Justice R. Subramanian passed the order while allowing a company petition filed by Credit Suisse AG, a Zurich based stock corporation, which had been assigned the right to receive the payments due to SR Technics. He directed an Official Liquidator to take over the assets of SpiceJet.

Reprieve

However, after pronouncing the judgement, the judge stayed the operation of his verdict for a period of three weeks to enable SpiceJet to go on appeal. The stay was granted on condition that the company should deposit $4 million to the credit of the SR Technics within a fortnight.

While allowing the company petition moved by Credit Suisse AG, the judge agreed with its counsel Rahul Balaji that SpiceJet had clearly accepted its liabilities, in terms of an agreement entered between the two companies for a period of 10 years in 2011, by executing certificates of acceptance.

The counsel said that despite executing the certificates of acceptance to avail the benefit of deferring the payment by six months, SpiceJet had failed to honour its commitments. Thereafter, the petitioner issued notice for winding up under Section 433 of the Companies Act of 1956 and filed the present case.

Though SpiceJet had raised several defences to oppose the plea for winding up, the judge held that they were not bona fide. “Having obtained an advantage under the supplementary agreement and having executed the documents as required, the respondent cannot now seek to evade liability raising technical objections,” he wrote.

No DGCA nod

It was argued on behalf of SpiceJet that SR Technics did not have a valid authorisation from Director General of Civil Aviation to carry out aircraft engine maintenance contracts between January 1, 2009 and May 18, 2015 and therefore the debt was against public policy in India.

However, the judge rejected the argument and concurred with Mr. Balaji that SpiceJet was well aware of the absence of DGCA approval and yet chose to enter into a maintenance contract. After having done so, the company could not now turn around and complain of violation of provisions of the Aircraft Act, the judge concluded.


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Printable version | Jan 26, 2022 10:17:26 PM | https://www.thehindu.com/news/national/hc-asks-liquidator-to-take-over-spicejet-assets-for-unpaid-dues/article37875098.ece

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