Madras HC Stays Winding Up Order, Asks To Pay $5 Million In 2 Weeks: SpiceJet

Low-cost carrier Spicejet informed on Tuesday that the Madras High Court has stayed its earlier order of winding up and appointing of an official liquidator on the condition that the airline deposits $5 million within a period of two weeks. 

On Monday, the Madras High Court had 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. However, the 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.

"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," Spicejet stated in a regulatory filing to the Bombay Stock Exchange. 

The airline added that it is examining the order and will initiate appropriate remedial steps such as an appeal before the appellate jurisdiction within the time frame allowed by the Madras High Court.  

The low-cost carrier stated that it had a strong case in hand and was hopeful of a favourable outcome from the appeal.

"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 a favourable outcome in the appeal," its communication to the exchange read. 

The airline informed the exchange that it opposed the Swiss company's stance on the grounds that it did not possess relevant permission from the Directorate General of Civil Aviation (DGCA) for carrying out the services laid out in the contract. It added that the Swiss company had made fraudulent representation to the company. "The Company (Spicejet) 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," it argued in court. 

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.