HC allows winding up of SpiceJet over outstanding dues

One-liner: The Madras High Court has ordered the winding up of private carrier SpiceJet Limited and directed the Official Liquidator attached to the HC to take over its assets, in a plea filed by a Swiss company over unpaid dues.

Winding up of firm: The court was allowing a petition from Credit Suisse AG, a stock company registered under the laws of Switzerland, which prayed for winding up of the Indian firm under the provisions of the Companies Act, 1956.

• It also prayed for the appointment of the Official Liquidator of the HC as one 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
• The respondent company (SpiceJet) has miserably failed to satisfy the three-pronged test suggested by the Supreme Court and hence had rendered itself liable to be wound up for its inability to pay its debts, a judge said.

Services of Swiss firm availed: 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 Nov 24. 2011
• Upon provision of the services under the agreement, SR Technics had raised invoices and SpiceJet had issued seven bills of exchange for the monies due under the invoices 

Need to know: The petitioner has been making repeated requests to the airline to make payments under various invoices. Since it did not honour its commitment under the agreements with SR Technics.

• As 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 petition before the High Court to wind up SpiceJet

SpiceJet contention: 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.

Bound to fulfill obligations: Rejecting the contentions, the judge said that a reading of certain Clauses in the agreement shows the parties to the contract are bound to fulfill all obligations, including recovery of excess payments made by SpiceJet to SR Technics.

Source: PTI