END
NOTE
SPICEJET IN THE DOCK
PHOTOGRAPH: Air Works
I
Finding a total lack of bona fide defence for the airline, the Madras High Court turned down the appeal by SpiceJet against its order passed in December 2021
n the first week of December last year, in response to line did not honour its commitment under the agreement with a petition filed by Credit Suisse AG, a stock corporation reg- SRT Technics for the provision of MRO services. Not only did istered under the laws of Switzerland, pertaining to the dues the airline fail to honour its commitment under the agreement of around $24.01 million that had not been paid by SpiceJet with SRT Technics, it even chose not to respond to repeated Limited, the Madras High Court issued an order to wind up requests and reminders by the MRO services provider pertaining of the leading low-cost carrier in the private sector of the Indian to outstanding dues since the commencement of the contract. airline industry. In its order, the Madras High Court also directed As for some reason not known to SRT Technics, the airline was the official liquidator attached to the court to take over the assets apparently not in a position to meet its financial obligations, the of the private carrier as well. Apparently, SpiceJet had availed of MRO company was left with no other option but to resort to the the services of SRT Technics, a company based in Switzerland, for legal option. The petitioner had been making repeated requests the maintenance, repair and overhaul (MRO) of aircraft engines, to the airline to make payments under various invoices. Since modules, components and assemblies that are mandatory for it did not honour its commitment under the agreements with operations of its aircraft by the airline . SRT Technics and that SpiceJet was not meeting with its finanOn November 24, 2011, an agreement which included the cial obligations, the petitioner issued a statutory notice. As there terms of payment by the airwas no response, it preferred line for the necessary services to adopt the legal option related to MRO for a period to resolve the issue. Thus it of ten years, was entered was that Credit Suisse AG into between the Indian carmoved the petition before rier SpiceJet and the Swiss the Madras High Court with company SRT Technics. The a plea to wind up SpiceJet. agreement between the two On its part, the airline companies also included put forth the argument that the terms of payment to be the alleged unpaid dues were made by the airline. Nearly a not legally enforceable as SRT year later, on August 24, 2012, Technics did not have a valid a supplemental agreement authorisation from the Direcbetween the two companies torate General of Civil Aviawas signed which provided tion (DGCA), the regulatory for a few alterations in the agency in the domain of the terms and conditions that civil aviation industry in India Madras High Court has issued an order to wind up of SpiceJet had been agreed upon earlier. to carry out engine maintefor the non-payment of MRO dues The changes in the revised nance during the currency of agreement included extenthe Agreement in the period sion of time for payment of the dues under different invoices and between 2009 and early 2015. The airline claimed that there was also included a scheme for deferred payment. As there had been a no liability on it to make payments against any debt it is alleged significant increase in the cost of MRO services, the supplemental to owe to the MRO service provider SRT Technics. As such, there agreement included provisions for escalation of cost. cannot be a winding up order under Section 433 of the CompaIn September 2012, Credit Suisse AG, the petitioner in the nies Act. case in Madras High Court, had entered into a financing agreeFinding a total lack of bona fide defence for the airline, the ment with SRT Technics which entitled it to receive payments on Madras High Court turned down the appeal by SpiceJet against their behalf for MRO services provided by the company to the air- its order passed in December last year by a single-judge bench line. Unfortunately, for some reason, the airline failed to honour to wind up its operations after the airline failed to make payits commitment made under the agreements with SRT Technics ment of over $24 million to the Swiss MRO service provider SRT and did not meet its financial obligations in respect of payments Technics. The ball now is finally back in the court of the Indian that were due to SRT Technics for the MRO services rendered by carrier SpiceJet to clear its dues or face the consequences of failthe company to the airline over the last nearly a decade. Despite ure to do so. SP repeated reminders and requests to the airline by SRT Technics — B.K. Pandey to make payments that were due under various invoices, the air-
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SP’S AIRBUZ • Issue 6 • 2021
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