Madras High Court orders winding up of SpiceJet over excellent dues
The Madras High Court has ordered the winding up of personal provider SpiceJet Limited and directed the official Liquidator hooked up to the High Court to take over its property, in a plea filed by a Swiss firm over unpaid dues.
The courtroom was permitting an organization petition from Credit Suisse AG, a inventory company registered underneath the legal guidelines of Switzerland, which prayed for winding up of the Indian agency underneath the provisions of the Companies Act, 1956 and appoint the Official Liquidator of the High Court because the Liquidator with all powers underneath Section 448 of the Companies Act to take cost of SpiceJet’s property, properties, inventory in commerce and books of accounts.
The “respondent company (SpiceJet) has miserably failed to satisfy the three pronged test suggested by the Supreme Court in Mathusudan Govardhandas & Co. v. Madhu Woollen Industries (P) Ltd., and hence had rendered itself liable to be wound up for its inability to pay its debts under Section 433 (e) of the Companies Act 1956,” Justice R Subramanian mentioned in his order on Monday and directed the personal provider be wound up and the official liquidator take over its property.
According to the petitioner, SpiceJet had availed of the companies of SR Technics, Switzerland, for upkeep, restore and overhauling of plane engines, modules, parts, assemblies and elements, that are necessary for its operations. An settlement for efficiency of such companies for a interval of 10 years was entered into between SpiceJet and SR Technics on November 24. 2011.
The phrases of funds have been additionally agreed. On August 24, 2012 a supplemental settlement was additionally entered into to vary sure phrases of the settlement. The amendments included extension of time for cost of cash due underneath numerous invoices and likewise a deferred cost scheme. Since there was a normal improve in the price, the 2012 supplemental settlement included adjustment of flight hour charges and provisions for escalation have been additionally made.
Upon provision of the companies underneath the settlement, SR Technics had raised invoices and SpiceJet had issued seven payments of trade for the monies due underneath the invoices. It additionally acknowledged the money owed every now and then by issuing certificates of acceptance in relation to the payments of trade which might indicate the respondent had not disputed the correctness of the declare made within the invoices.
The petitioner, specifically Credit Suisse AG, entered right into a financing settlement in September 2012 with SR Technics and underneath a transaction settlement, the latter assigned all its current and future rights to obtain funds underneath the settlement to the petitioner firm.
The task included the Bills of trade issued by SpiceJet pursuant to the 2011 settlement and the 2012 supplementary settlement. In view of the assignments made by SR Technics, the petitioner is entitled to obtain funds of the monies due underneath the seven invoices from Spicejet, petitioner firm claimed.
The petitioner has been making repeated requests to the airline to make funds underneath numerous invoices. Since it didn’t honour its dedication underneath the agreements with SR Technics and that SpiceJet will not be ready to satisfy its monetary obligations, the petitioner issued a statutory discover. As there was no response, it most well-liked the current firm petition earlier than the High Court to wind up SpiceJet.
SpiceJet contended the alleged money owed usually are not legally enforceable and as such there can’t be a winding up order underneath Section 433 of the Companies Act. The petitioner will not be a creditor of SpiceJet and within the absence of any contractual relationship of a debtor and creditor, a winding up continuing is not going to lie.
The agreements between SpiceJet and SR Technics don’t authorise task to the current petitioner. SR Technics had additionally issued a discover underneath Section 434 of the Companies Act in January 2015 and didn’t pursue the winding up, it argued and claimed that there was no legal responsibility to pay the very debt.
Rejecting the contentions, the decide mentioned {that a} studying of sure Clauses within the settlement would present the events to the contract are certain to meet all obligations which occurred previous to the termination and it’ll not stop both occasion from claiming towards breach of any obligations underneath the settlement together with restoration of extra funds made by SpiceJet to SR Technics.
The above clause would make it very clear that whereas it was open to SpiceJet to terminate the contract given that SR Technics didn’t have a legitimate authorisation, the termination by itself wouldn’t relieve SpiceJet of the obligations that arose underneath the contract previous to such termination changing into efficient.
Admittedly, SpiceJet had not chosen to terminate the contract. It had continued to avail the companies.
“Therefore in my opinion, it cannot now turn around and say, there is a violation of the provisions of the Aircraft Act or the C.A.R. Rules made there under and therefore the liability ceased. I thus find that the respondent Company has miserably failed to satisfy the three pronged test suggested by the Hon’ble Supreme Court in Mathusudan Govardhandas & Co. v. Madhu Woollen Industries (P) Ltd., supra, and hence had rendered itself liable to be wound up for its inability to pay its debts under Section 433 (e) of the Companies Act 1956. I am therefore of the opinion that this Company Petition should be allowed and the respondent Company directed to be wound up. The Official Liquidator is directed to take over the assets of the respondent Company,” the decide mentioned.
