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Madras HC stays on earlier order of winding up SpiceJet, asks the airline to deposit $5M within two weeks; SpiceJet to move appellate court

SpiceJet said that "the Company is examining the order and shall initiate appropriate remedial steps including preferring an appeal before the appellate jurisdiction within the time frame allowed by the Madras High Court."

December 08, 2021 5:01 IST | India Infoline News Service
SpiceJet has announced that Madras High Court has stayed the earlier order of winding up and appointing an official liquidator for three weeks, subject to the condition that the Company deposits the amount equivalent to $5M within two weeks.

The order was announced on December 06, 2021.

Briefly, the proceedings before the Madras High Court arising out of an old agreement dated November 24, 2011, between SpiceJet Limited and SRT Technics (“SRT”) for provision of Engine Maintenance Services (“Agreement”). Credit Suisse AG (“Credit Suisse”) initiated Company Petition No. 363 of 2015 titled “Credit Suisse AG v. SpiceJet Limited” as a purported assignee of SRT claiming non-payment of amounts aggregating to $24.01 million under the Agreement.

The airline stated that SpiceJet opposed the petition inter alia because there is no legally enforceable debt because SRT, did not possess the relevant Directorate General of Civil Aviation (“DGCA”) approval for the provision of services under the Agreement. SRT made fraudulent misrepresentation to the Company of having applicable DGCA approval for providing the services.

SpiceJet had also 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. Since the agreement falls and is void, Credit Suisse as an assignee does not and cannot have any claim against the Company.

On Tuesday, SpiceJet said that the "Madras High Court despite holding that SRT did not have a valid authorization from DGCA to carry out engine maintenance during the currency of the Agreement rejected the Company’s defence and ordered winding up of the Company and directed the official liquidator to take over the assets of the Company."

"However, the Madras High Court vide its order of December 6, 2021, was pleased to stay the operation of the order for a period of three weeks, subject to the condition that the Company deposits the amount equivalent to USD five million within a period of two weeks."

Further, SpiceJet said that "the Company is examining the order and shall initiate appropriate remedial steps including preferring an appeal before the appellate jurisdiction within the time frame allowed by the Madras High Court. The Company believes it has a good case on merits and is hopeful of having favourable outcome in the appeal."

On Sensex, SpiceJet closed at Rs67.80 per piece down by 1.02%. 

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