Madras High Court on Monday asked low-cost carrier Spicejet to wind up its operations for non-payment of more than $24 million to Swiss company SR Technics, which is responsible for maintenance, repair and overhauling of aircraft engines, modules, components, assemblies and parts.
Justice R. Subramaniam of the Madras High Court bench also allowed a petition filed by Credit Suisse AG, which will receive the dues pending to SR Technics. The Madras High Court asked the official liquidator to take over the airline's assets. However, Justice Subramaniam stayed the operation of the judgement for a period of three weeks. This was to enable the low-cost carrier to appeal against the ruling.
"...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," the airline stated in a regulatory filing to the Bombay Stock Exchange on Tuesday.
Business news publication, Mint reports that the order stated should the airlines fail to pay its debt under the mentioned period, it would be deemed to be unable to pay its debts.
"In view of the presumption of inability to pay created under Section 434 of the Companies Act, an order for winding up should automatically follow, unless the debtor Company is able to show that the debt itself is unenforceable or that there is a bona fide dispute," Mint quoted from the order.
The order mentioned that Section 434 of the Companies Act mandates that in view of the presumption of inability to pay, an order of winding up should automatically follow. This, unless the debtor company is able to show that the debt is unenforceable or under bona fide dispute.
The two parties had entered into a supplemental agreement in August 2012. The agreement provided for an extension in payment of dues and a deferred payment scheme, the publication informs.
The initial agreement for maintenance and repair services for a ten-year period was signed in November 2011.
"Upon provision of the services under the agreement, SR Technics had raised invoices and the respondent had issued seven bills of exchange for the monies due under the invoices. The respondent also acknowledge(s) the debts from time to time by issuing a certificate of acceptance in relation to the bills of exchange which would imply that the respondent had not disputed the correctness of the claim made in the invoices," Mint quoted from the order.
The low-cost carrier had reported a loss of about Rs 562 crore in the September-end quarter. Its revenue from operations had increased 23 per cent on a year-over-year basis to reach Rs 1,342 crore in the same period.
Spicejet's stock closed 0.51 per cent down at Rs 68.50 on the NSE and 0.44 per cent down at Rs 68.50 at the BSE on Tuesday.