MADRAS HC ALLOWED WIND-UP OF SPICEJET

Justice R Subramanian of the Madras High Court allowed Credit Suisse's plea to wind up SpiceJet and direct its official liquidator to take over the company's assets. 

BACKGROUND

Spicejet availed services of SR Technics, Switzerland, for repair, modules, Maintenance of aircraft engines. In 2011 an agreement was executed between Spicejet and SR Technics for ten years, and accordingly, the terms of payment were also decided. SR raised invoices for the services rendered, after which Spicejet issued seven bills of exchange for dues under the issued invoices. The company also acknowledged its debt, and the same was accepted through acceptance certificates concerning the bills of exchange.

In 2012, Credit Suisse, a stock corporation registered under the Switzerland laws, entered an agreement with SR Technics and was allotted all present and future rights to receive payments regarding Spicejet. Credit Suisse made several requests thereafter, but Spicejet failed to honor them. Later it was learned that SpiceJet was in a position to fulfill its obligation. On learning the situation of the Airline, Credit Suisse issued a notice which was not responded and hence a winding-up was initiated.

ARGUMENTS

Senior Advocate V Ramakrishnan, appearing for Spicejet, argued that Credit Suisse was not one of Spicejet's creditors and the alleged debts were not legally enforceable. Moreover, the agreement between the two (the airline and SR tech) did not authorize authorization to Credit Suisse.

Advocate Rahul Balaji, appearing for Credit Suisse, argued that if the default company does not respond to a statutory notice, it will intensify the burden on the debtor to prove that the debt is whether or whether not enforceable under Indian law.

HELD

Finding various validity in the contentions made by Credit Suisse. The Court held that Spicejet "failed to satisfy the three-pronged test" and therefore directed to wound up the airline.

Author: Papiha Ghoshal