SpiceJet must move HC to obtain reimbursement of bank guarantee: SC

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Bombay : The Supreme Court on Thursday ordered SpiceJet Ltd to apply to the Madras High Court (HC) to withdraw the $5 million bank guarantee it had lodged with the court in May.

SpiceJet had posted the bank guarantee on instructions from Madras HC, at a time when the SC was hearing a liquidation case against the company filed by Credit Suisse AG. The winding up case is now settled. A bench headed by former Chief Justice NV Ramana noted that the settlement between the two parties has been reached and settled the case.

On May 25, the low-cost airline informed the Supreme Court that it had settled its dispute with Credit Suisse over unpaid dues. The settlement was executed on May 23, and the consent terms were submitted to the Supreme Court.

The airline said the settlement involves paying a certain amount upfront and the balance within a mutually agreed time frame, without sharing further details.

The case originated in November 2011 when the airline headed by Ajay Singh signed a 10-year aircraft servicing and maintenance contract with SR Technics, a Swiss provider of maintenance, repair and overhaul services. (MOR).

The Swiss company had issued invoices and the airline had issued seven bills of exchange to cover the amounts due on the invoices. In September 2012, SR Technics entered into a financing agreement with Credit Suisse, assigning to the lender all of its present and future rights to receive payments under the agreement. However, after the airline failed to make payments of more than $24 million, Credit Suisse filed for liquidation against SpiceJet in the Madras High Court last year.

On December 6, 2021, a single judge bench of Madras HC authorized winding-up proceedings against SpiceJet under Section 433(e) of the Companies Act 1956 and ordered the official liquidator to take over the assets of the airline company. The airline challenged the order before a division bench.

The Division Bench upheld the Single Judge’s order. The airline then challenged the Supreme Court’s decision, which stayed the HC’s order to wind up the airline, and gave the company three weeks to settle the case. However, the final settlement took longer.

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