India’s SpiceJet challenges liquidation order

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SpiceJet DHC-8-400

SpiceJet (SG, Delhi Int’l) is challenging a Madras High Court ruling last month to have the Indian low-cost carrier wound up over USD24.1 million in unpaid debt to investment bank Credit Suisse.

The airline has lodged an appeal with the Division Bench of the Madras High Court against the December 6, 2021 liquidation. As reported, the court had suspended the order to allow the cash-strapped carrier to challenge the ruling. As directed, SpiceJet deposited USD5 million to the court to stay the liquidation order, The Hindu reports.

SpiceJet stands accused of having failed to pay 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.

The court on January 5 heard submissions and preliminary arguments by both parties.

SpiceJet’s senior counsel, V. Ramakrishnan, submitted the budget carrier had discovered midway through the contract, that SR Technics was unauthorised as an MRO by India’s Directorate General of Civil Aviation (DGCA) for the period January 1, 2009, to May 18, 2015. “This was something horrendous, shocking and very, very serious and so we stopped paying,” Ramakrishnan said.

He argued the court in December had made two errors: It had assumed that SpiceJet had entered into the contract in full knowledge of the lack of DGCA approval; and that SpiceJet had not terminated the contract when it discovered the problem. “This is like asking why I didn’t divorce my wife, why I stayed with her. Termination is not a mandatory requirement.”

He also argued that an “illegal claim” for dues could not be defined as “debts” under India’s Companies Act and thereby result in a winding-up order.

Rahul Balaji representing Credit Suisse argued that SpiceJet could not deny the existence of invoices and certificates of acceptance. “Their argument is like a wine which they think will improve with age. Not a single document was issued to me by them during the agreement period stating that I am not authorised and so they will not pay me,” he said.

The case continues.

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