Appeal Against Admission Of Winding Up: 'Moonshine Defence By SpiceJet, Ploy To Avoid Liability': Swiss Corporation Argues Before Madras High Court

After hearing the caveator Credit Suisse AG at length, Madras High Court has decided to hear the appeal against the admission of SpiceJet's winding up further on January 10, 2022. Yesterday, a Division Bench of Justice Paresh Upadhyay and Sathi Kumar Sukumara Kurup heard the counsel appearing for the Switzerland based Corporation, Advocate Rahul Balaji. While deferring the hearing, the court has also mentioned that the interim stay on the operation of winding up order will continue till 11th January subject to further orders passed. Credit Suisse AG contended that the admission of winding up and appointment of provisional liquidator by the single judge bench does not suffer from any illegality, procedural or otherwise. Yesterday, the counsel appearing for the appellant, Senior Advocate Ramakrishnan Viraraghavan had contended that a party who has violated a public safety statute cannot demand enforcement of a claim rendered illegal. On 6th December, Madras High Court had ordered the admission of winding up SpiceJet Ltd. while adjudicating a company petition filed by Credit Suisse AG, a Switzerland based Stock Corporation and a creditor, who alleged inability on the part of respondent Airlines to pay the debts owed to the former. The company petition was filed by the Swiss Corporation under Sections 433(e) and (f) r/w Sections 434 and 439 of the Companies Act, 1956, before the single judge bench. Background SpiceJet Limited (First Party) had availed the services of SR Technics (Second Party) in Switzerland for Air Craft maintenance and repair, among other related services, via an agreement that has a lifetime of 10 years, back in 2011. In 2021, a supplemental agreement was signed between the two parties that enabled the airlines to pay back the monies raised by SR Technics at various occasions through a deferred payment scheme. Before the High Court, the contentious matter was the seven invoices raised by SR Technics, the seven corresponding Bills of Exchange for the amount due under invoices, and the acknowledgement of debts through the issuance of certificates of acceptance by the Airlines. In 2012, the stock corporation Credit Suisse AG (Third Party) was assigned all the rights to receive payments due to SR Technics through a financial agreement. The assignment also entitled the third party to receive payments from SpiceJet under the seven invoices issued by SR Technics. Even after repeated requests, SpiceJet allegedly shrugged off its responsibility to pay the monies due under the invoices, that too after a statutory notice under Sections 433 and 434 of the Companies Act, 1956. Therefore, the third party preferred a company petition for winding up under Section 433 (e), citing the inability on the part of the first party airlines to repay the debts. Court Room Exchange The counsel mentioned before going into the merits that since the hearing pertains to a company petition, it involves a continuing exercise of jurisdiction and appeal is a continuation of the original procedure. Therefore, he told the court that he wanted to show some recent developments by producing the annual statement of the appellant passenger carrier. According to him, this was necessary since SpiceJet was ordered by the single judge bench to deposit only 20 per cent of the total claim (24 Million US Dollars) by Credit Suisse for a stay on the operation of winding up order. On the merits, the counsel argued that the submission of SpiceJet that they were unaware of the alleged non-approval from DGCA is inherently false. The argument that they came to know about the non-existence of valid license from DGCA only in 2020 via an RTI application is negated by the finding of UK Arbitral Tribunal in favour of SR Technics back in 2017. The respondent banker Credit Suisse submitted that the Airlines entered into an agreement for 10 years with SR Technics for aircraft maintenance which can be deemed as the original agreement. Thereafter, a supplementary agreement was entered into between SR Technics and SpiceJet in 2012, whereby SpiceJet was granted the option of a deferred payment scheme and extension of time for payment of monies due under various invoices. The financing agreement between Credit Suisse AG and SR Technics later that year assigned all rights to the former for receiving SR technics' payments. It also included the assignment of Bills of Exchange issued by appellant airlines based on the original and supplemental agreements, according to the counsel. He submitted that the Bills of Exchange. Confronting the submission made by appellant, Mr. Balaji argued that when the Banker has the right to assignment available and seven Bills of Exchange have been executed in their favour, the airlines cannot take the stand that they don't know the beneficiary. The appellant had earlier argued that the Swiss Corporation cannot be treated as a ...

Appeal Against Admission Of Winding Up: 'Moonshine Defence By SpiceJet, Ploy To Avoid Liability': Swiss Corporation Argues Before Madras High Court

Sebin James

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