Madras High Court asks liquidator to take over SpiceJet assets for unpaid dues
The Madras High Court has ordered the winding up of private airline SpiceJet Limited and directed the official Liquidator attached to the High Court to take over its assets, in a plea filed by a Swiss company over unpaid dues of 20 million dollars. Earlier the High Court had asked Spice Jet to deposit 5 million dollars to avoid the liquidation process. On Tuesday Spicejet management said that they are examining the judgment and they will challenge in the higher forums.
The court was allowing a company petition from Credit Suisse AG, a stock corporation registered under the laws of Switzerland, which prayed for winding up of the Indian firm under the provisions of the Companies Act, 1956 and appoint the official liquidator of the High Court as the liquidator with all powers under Section 448 of the Companies Act to take charge of SpiceJet’s assets, properties, stock in trade and books of accounts. Justice R Subramanian said in his order on Monday and directed the private carrier be wound up and the official liquidator takes over its assets.
According to the petitioner, SpiceJet had availed of the services of SR Technics, Switzerland, for maintenance, repair, and overhauling of aircraft engines, modules, components, assemblies, and parts, which are mandatory for its operations. An agreement for the performance of such services for a period of 10 years was entered into between SpiceJet and SR Technics on November 24. 2011.
The petitioner, namely Credit Suisse AG, entered into a financing agreement in September 2012 with SR Technics, and under a transaction agreement, the latter assigned all its present and future rights to receive payments under the agreement to the petitioner company. The petitioner has been making repeated requests to the airline to make payments under various invoices. Since it did not honor its commitment under the agreements with SR Technics and that SpiceJet is not in a position to meet its financial obligations, the petitioner issued a statutory notice. As there was no response, it preferred the present company petition before the High Court to wind up SpiceJet.
SpiceJet contended the alleged debts are not legally enforceable and as such there cannot be a winding-up order under Section 433 of the Companies Act. The petitioner is not a creditor of SpiceJet and in the absence of any contractual relationship of a debtor and creditor, a winding-up proceeding will not lie.
Rejecting the contentions, the judge said that a reading of certain clauses in the agreement would show the parties to the contract are bound to fulfill all obligations which occurred prior to the termination and it will not prevent either party from claiming against breach of any obligations under the agreement including recovery of excess payments made by SpiceJet to SR Technics.
It is interesting to note that Ajay Singh owned Spice Jet bid for Air India while it had not even had money to pay dues of 20 million dollars (Rs.150 crore) or even to deposit 5 million dollars (Rs.37.5 crore) to avoid the liquidation process. Spice Jet was a politically exposed company founded by Ajay Singh in 2001. Ajay Singh that time was a close associate of BJP leader late Pramod Mahajan. When the Congress-led UPA regime came in 2004, Spice Jet has transferred to DMK leaders Maran brothers and when BJP came back to power in 2014 it again came back to the hands of Ajay Singh. This deal was considered totally illegal as the change hands were not disclosed to Stock Exchanges. Later Maran family and Ajay Singh broke up so many cases came to court and it was disclosed that Spice Jet was handed over to Ajay Singh by the Maran family for a token value of just two rupees with Ajay Singh assured to take care of the liabilities.
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