HC orders winding up of SpiceJet but then gives time to appeal. Unbelievable defence by SpiceJet to evade the liability.

The Madras High Court on December 6th, 2021 directed the airline to wind up for non-payment of over $24 million to SR Technics, a Swiss company that maintains, repairs, overhauls aircraft engines and components.

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

Key points to note –

  • The wind up petition was filed by Credit Suisse AG, a Zurich based corporation, which was assigned the right to receive the payments due to SR Technics.
  • The judge agreed 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.
  • Interestingly SpiceJet defence was – 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. Judge rightly rejected the argument that SpiceJet was 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.

Sometimes when one hears these kind of illogical arguments, one really wonders what does the counsel and the Company think of the judiciary !

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