SpiceJet Vs Credit Suisse AG- Madras High Court Dismisses Appeal Against Airline's Admission Of Winding Up

Madras High Court has dismissed the appeal preferred by SpiceJet against a single-judge bench order for admission of its winding up on Credit Suisse AG's Company Petition. Yesterday, Madras High Court had reserved the pronouncement of judgment on SpiceJet's appeal for today. After hearing the counsels appearing for SpiceJet and Credit Suisse at length, A Division Bench of Sathi Kumar Sukumara Kurup and Paresh Upadhyay noted in the order that the Original Second Appeals were dismissed and the Connected Civil Miscellaneous Petitions were accordingly disposed off. Since the stay on the operation of the impugned order is till today, the bench agreed to extend the application of stay order till 28th January so as to afford the appellant an opportunity to approach the Supreme Court. Since the court has not entertained the appeal at all, there would be no changes to the order of the single judge bench.The grievances of the appellant airlines and the issues framed by the court were pertaining to the alleged errors in the single judge bench order that does the following:(i) admission of the winding-up petition, which is filed invoking Sections 433 (e) and (f) of the Companies Act, 1956, and (ii) appointment of the Official Liquidator, High Court of Madras as Provisional Liquidator. 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. 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 at various occasions through a deferred payment scheme. 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.Arguments In Gist & Court's ObservationsThe appellant senior counsel. V. Ramakrishnan, primarily contended that the documents relied on by the petitioner Credit Suisse, Switzerland are not stamped and therefore the Courts in India will not take cognisance thereof. Secondly, the Airlines contended that S.R.Technics did not have a valid license from the Director-General of Civil Aviation (DGCA) and therefore it could not have legally maintained the Aircrafts / Engines of the appellant-Company, which points to a bona fide dispute about the payment for services.The counsel also submitted that the two subsequent modifications to the original single judge bench order was erroneous since it involved substantive amendments and not just clerical errors.The counsel for Credit Suisse, Advocate Rahul Balaji, submitted that the order passed by the Company Court ordering admission of the winding-up petition under Section 433 (e) and (f) of the Act and appointment of the Official Liquidator, High Court, Madras as Provisional Liquidator can not be said to be erroneous.The Division Bench independently examined if there was a defence of bona fide dispute as against the deeming fiction of inability to pay back to the creditor under Section 434 (1) (a) of the Act.At the beginning, the court noted that the creditor is a named endorsee as accepted by the Airlines by referring to the supplemental agreement that talks about availing a deferred payment scheme by the latter. The deferred payment scheme for invoices and Bills of Exchange has made specific reference to the Switzerland Corporation, the court observed."...It is duly endorsed by the Banker of the appellant-Company as well. On the basis of these documents, Credit Suisse, Switzerland made payment to S.R.Technics on behalf of the...

SpiceJet Vs Credit Suisse AG- Madras High Court Dismisses Appeal Against Airline's Admission Of Winding Up

Sebin James

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