Supreme Court directs SpiceJet to approach Madras High Court to withdraw $5 million bank guarantee

Supreme Court directs SpiceJet to approach Madras High Court to withdraw $5 million bank guarantee

SpiceJet Ltd has been directed by the Supreme Court to approach the Madras High Court to withdraw the $5 million bank guarantee that it deposited with the court in May.

The bank guarantee was deposited on direction from the Madras High Court during the winding up petition against the company filed by Credit Suisse AG. The winding up petition was adjudicated by the Supreme Court and now has been settled, therefore the matter was disposed off.

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.

However, the matter was settled between the parties involving payment of certain amount upfront and balance amount over a mutually agreed timeline.

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.