Spicejet gets reprieve from winding up order

The Madras High Court has stayed its earlier order for winding up SpiceJet and appointing official liquidator for three weeks, the airline informed the stock exchanges on Tuesday. The company will have to deposit an amount equivalent to $5 million within two weeks.

The case pertains to a November 24, 2011 agreement between SpiceJet and SRT Technics for providing engine maintenance services. Credit Suisse AG initiated the petition against SpiceJet as a purported assignee of SRT claiming nonpayment of amounts aggregating to $24.01 million under the agreement.

In September 2012, SR Technics had assigned all its present and future rights to receive payments under the agreement to Credit Suisse.

Credit Suisse prayed for winding up of SpiceJet under the provisions of the Companies

Act, 1956 and to appoint the official liquidator of the high court as the liquidator to take charge of SpiceJet's assets, properties, stock in trade and books of accounts.

SpiceJet opposed the petition inter alia on the grounds that there is no legally enforceable debt because SRT did not possess the relevant Directorate General of Civil Aviation approval for provision of services under the agreement.

However, the Madras High Court on Monday found that SpiceJet had not chosen to terminate the contract. It had continued to avail of the services. Hence, it cannot say that there is a violation of the provisions of the Aircraft Act or the C.A.R. Rules and therefore the liability ceased.

The court ordered the winding up of SpiceJet and directed the official liquidator to take over the assets of the company. However, later in the day the court stayed the earlier order, the company said.