The Madras High Court in India has ordered Spicejet to be wound up and liquidated due to its debt to SR Technics, unless the airline deposits US$5 million within the fortnight to temporarily halt the order so the airline can appeal.
Switzerland based financial services provider Credit Suisse, on behalf of MRO company SR Technics, has filed a petition against Spicejet over its pending dues, local media reports.
According to the petitioner, SpiceJet previously reached an agreement with SR Technics in 2011 for the provision of engine maintenance services, but the airline purportedly failed to make payments of up to US$24 million, resulting in the latter taking matters to court, the reports add.
The Madras High Court passed an order on 6 December, ruling that Spicejet is to be wound up and directed an official liquidator to take over the assets of Spicejet, the reports highlight.
Spicejet says in a statement statement that the Madras High Court will stay the operation of the order for a period of three weeks, subject to the condition that the airline deposits the amount equivalent to US$5 million within a period of two weeks.
This means that the court will temporarily halt its order for three weeks for the airline to make an appeal, if it pays a deposit upfront within the next two weeks, it says.
The airline says it opposed the petition on the grounds that there is no legally enforceable debt as SR Technics did not possess the relevant India Directorate General of Civil Aviation (DGCA) approval for provision of services under the agreement.
Spicejet further argues SR Technics made a fraudulent misrepresentation to the airline of having applicable DGCA approval for providing the services. It says because of this misrepresentation, the entire agreement is void and, therefore, Credit Suisse as an assignee does not have any claim against the airline.
The airline says in the statement it is examining the order and shall initiate appropriate remedial steps including preferring an appeal before the appellate jurisdiction within the time frame allowed by the Madras High Court, adding that it believes it has a good case on merits and is hopeful of having a favourable outcome in the appeal.
Spicejet is the second largest airline in India and has a fleet of 62 Boeing 737s and 32 De Havilland Canada Dash 8-400s.
Smart Aviation Asia Pacific previously reported that Spicejet has cut close to a third of its weekly domestic flights for the upcoming winter schedule, despite government-imposed capacity restrictions being lifted.
The airline also has outstanding dues of Rs 185 crore (US$25 million) owing to the Airports Authority of India (AAI), media outlet The Print reports, quoting the minister of state for civil aviation V K Singh.
The AAI owns around 125 airports across the country. Airlines have to regularly pay various charges such as landing charges and parking charges to the AAI to operate aircraft from its airports, the report adds.
Picture Source: aerotime.aero
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