SpiceJet payment default case: SC gives three weeks to airlines to clear dues, but warns insolvency
SpiceJet had challenged a Madras HC order that directed the airline to pay $5 million to financial services firm Credit Suisse, or face liquidation of assets.
The Supreme Court on Friday granted a three-week stay on Madras High Court’s order to wind up private airline SpiceJet in relation to payment default case, Bar and Bench reported.
However, the three-judge bench headed by Chief Justice of India NV Ramana warned the airline of stern action.
“If you don’t want to run the airline, we will declare you insolvent,” Ramana said. “This is not the way to run an airline.”
On December 7, the Madras High Court had ordered SpiceJet to pay $5 million (nearly Rs 37.71 crore) within two weeks to Switzerland-based financial services firm Credit Suisse. The court had said that SpiceJet’s assets would be liquidated if it fails to pay the amount.
In its petition, Credit Suisse had said that in 2011, SpiceJet had signed a 10-year agreement with Swiss company SR Technics for the repair and maintenance of engines and other parts of the airline’s planes.
A year later, Credit Suisse had signed a financing agreement with SR Technics. It gave Credit Suisse the right to receive payments from SpiceJet. The financial services firm alleged that SpiceJet did not pay the debt despite being asked to do so repeatedly.
After the Madras High Court ordered SpiecJet to make the payment, the airline challenged the single-judge bench’s order to a division bench.
However, the two-judge bench of Justices Sathi Kumar Sukumara Kurup and Paresh Upadhyay dismissed the petition and upheld the previous
order. The court had, however, put on hold the order to liquify SpiceJet’s assets till January 28, Live Law reported.
On Friday, the Supreme Court was hearing SpiceJet’s plea challenging the division bench order.
Senior Advocate Harish Salve, representing SpiceJet, requested the court to grant three weeks’ time to resolve the matter. Advocate KV Vishwanathan, appearing for Credit Suisse, did not object to the request.
The Supreme Court thus put an interim stay on the Madras High Court order for three weeks. However, the judges warned that if SpiceJet does not produce its financial status within three weeks, the court would allow liquidation of its assets.