SpiceJet-Credit Suisse financial dispute settled, inform SC
The cash-strapped airline SpiceJet and Swiss firm Credit Suisse AG Thursday told the Supreme Court about the resolution of their financial dispute which led to the withdrawal of an appeal by the low-cost airline against a Madras High Court verdict which had ordered its winding up due to alleged non-payment of dues to the Swiss firm. Credit Suisse AG had approached Madras High Court against Spicejet for nonpayment of dues of USD 24 million towards maintenance, repairing, and overhauling of the aircraft engines and components, and the High Court had ordered insolvency proceedings on Ajay Singh headed SpiceJet.
“There is a settlement which has taken place on May 23, 2022, as per the consent terms. In view of it, both the parties are satisfied with the settlement and want to withdraw the SLP (special leave petition) filed by the petitioner. Accordingly, the application is allowed,” an apex court bench comprising Chief Justice N V Ramana and Justices Hima Kohli and C T Ravikumar said in the order. The parties, it said, are directed to abide by the consent terms. “It is noted that some amount was deposited in the Madras High Court in pursuance of the order of Madras High Court. Parties are at liberty to make an application for release of the money,” the apex court said.
Now, according to the terms of the settlement, the bank guarantee has to be released and returned to the bank, it said. According to the Swiss firm, SpiceJet had availed the services of SR Technics, Switzerland, for maintenance, repair, and overhauling of aircraft engines, modules, components, assemblies, and parts, which were mandatory for its operations. An agreement for such services for 10 years was entered into between SpiceJet and SR Technics on November 24, 2011 (at that time Maran family was controlling SpiceJet). The terms of payments were also agreed upon.
A few days back, SpiceJet and its former promoter Maran family also told Supreme Court about their readiness for a mediation to settle their disputes about Rs.300 crore. On the same day Tuesday (August 23), SpiceJet announced that it has entered into a settlement with aircraft lessor Goshawk Aviation and its affiliated entities related to two Boeing 737 Max aircraft and one Boeing 737-800 NG aircraft.[1]
SpiceJet is a classic case of a politically exposed company in India. SpiceJet was started by Ajay Singh in 2002. BJP-linked Ajay Singh was a close aide of late Union Minister Pramod Mahajan and when UPA came to power, DMK’s Maran family became the owners of the airline. Interestingly, when BJP returned to power in 2014, the Maran family sold SpiceJet back to Ajay Singh in a dubious way.
The sale of SpiceJet back to Ajay Singh was totally illegal as the company was listed on Stock Exchange and the deal was done at a non-disclosed price. Later Maran family and Ajay Singh started tussling, it was revealed to the Courts that the deal was for just Rs. Two (Repeat – Just Rs.2) on the promise that Ajay Singh would take care of the financial burdens. This was a total illegal deal as SpiceJet is a stock exchange-listed company and the sale/buy of a sizeable number of shares has to be informed to the exchange through public disclosure. Later Maran family filed petitions for around Rs.300 crore dispute.
Reference:
[1] SC to consider plea for mediation to settle disputes between SpiceJet Ajay Singh and Maran family – Aug 16, 2022, PGurus.com
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