HomeBUSINESSSpiceJet must move HC to get bank guarantee refund: SC

SpiceJet must move HC to get bank guarantee refund: SC


MUMBAI : The Supreme Court on Thursday directed SpiceJet Ltd to approach the Madras High Court (HC) to withdraw the $5 million bank guarantee that it deposited with the court in May.

SpiceJet had deposited the bank guarantee on directions from the Madras HC, at a time the SC was hearing a winding-up case against the company filed by Credit Suisse AG. The winding-up case has now been settled. A bench led by former chief justice N.V. Ramana took on record that the settlement between the two parties has been completed and disposed of the matter.

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

The airline said the settlement involved payment of certain amount upfront and balance amount over a mutually agreed timeline, without sharing more details.

The case has its origins in November 2011 when the Ajay Singh-led airline signed a 10-year aircraft servicing and maintenance agreement with SR Technics, a Swiss maintenance, repair and overhauling (MRO) service provider.

The Swiss company had issued invoices, and the airline had issued seven bills of exchange to cover the money owed on the invoices. In September 2012, SR Technics entered into a finance agreement with Credit Suisse, assigning the lender all of its current and future rights to receive payments under the agreement. However, after the airline failed to make payments of over $24 million, Credit Suisse filed a winding-up petition against SpiceJet in the Madras High Court last year.

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

The division bench upheld the single judge’s order. The airline then challenged the ruling in the Supreme Court, which stayed the HC order to wind up the airline, and granted the company three weeks to settle the matter. However, the final settlement took longer.

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