Dispute with Credit Suisse: how SpiceJet was almost liquidated


SpiceJet, promoted by Ajay Singh, and Swiss bank Credit Suisse informed the Supreme Court on August 18 that the two had settled a long and winding dispute through an out-of-court settlement. This led to the withdrawal of an appeal by SpiceJet against a Madras High Court order that would have potentially led to the low-cost airline being liquidated. The dispute arose at a time when Kalanithi Maran owned the airline.

The dispute

The bone of contention was the non-payment of money by SpiceJet to SR Technics, a Swiss company specializing in the repair, maintenance and overhaul of aircraft and engines. The aircraft maintenance agreement was signed between the two in 2011. In September 2012, SR Technics transferred all rights to receive payments to Credit Suisse. The Swiss bank argued in court that despite repeated requests, all attempts to recover the airline’s money had failed. In 2012, further provisions were made in the agreement to take into account rising costs and future escalation of monies to be paid for maintenance services rendered by SR Technics.

The Seven Bills

SR Technics had issued seven invoices totaling $25 million between July and December 2013. SpiceJet had issued bills of exchange in Zurich payable between January and May 2014. The money was to be paid from SpiceJet’s account at the Chanakyapuri branch of YES Bank in New Delhi. However, according to statements made in court, only $1 million of this outstanding amount was paid by SpiceJet in 2014 and the rest remained unpaid. It was at this point that Credit Suisse went to the Madras High Court to recover the dues, as the airline’s head office was located at Murasoli Maran Towers in Chennai at the time.

The Liquidation Petition

Credit Suisse argued in court that since SpiceJet’s position was not financially viable and it was unable to repay the money owed to it, the airline had to be liquidated to recover his rights. In addition, SR Technics had initiated arbitration proceedings in the United Kingdom and obtained an award in its favour. In December 2021, the Madras HC ruled in favor of Credit Suisse and authorized the filing of a petition for the liquidation of the airline. The airline immediately appealed to the Supreme Court after its appeal against the order was rejected by Madras HC. Lead attorneys Harish Salve and Mukul Rohatgi appeared for SpiceJet and won a stay, with the nation’s highest court staying the winding-up order until February 2022.

SpiceJet’s claim

The airline pointed out technical errors in its agreements while defending itself in court. He said the contracts were not signed in accordance with Indian laws and therefore could not be enforced. One of his claims was that SR Technics did not have a valid license to operate as an aircraft maintenance service provider in India between 2009 and 2015 when the contracts were signed. The court found that SpiceJet had signed the contracts with SR Technics when it knew that the latter did not hold a license issued by the Directorate General of Civil Aviation (DGCA). The court found no basis for the airline’s claims.

Chain of settlements

The out-of-court settlement between SpiceJet and Credit Suisse in which the airline agreed to pay the money is among a series of similar settlements reached in recent times. The airline told the courts it was settling its share transfer dispute with Kalanithi Maran in the same way. The airline had also reached out-of-court settlements with some of its aircraft lessors, including Irish company Goshawk Aviation in August. The airline said it was modernizing its fleet and, despite financial difficulties, was looking to expand its operations. The DGCA has asked SpiceJet to operate only half of its fleet due to safety concerns after a series of in-flight scares this year.


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