The Supreme Court on August 14 issued a contempt notice to low-cost airline SpiceJet's chairman and managing director Ajay Singh on a plea filed by Credit Suisse, accusing the cash-strapped carrier of failing to comply with a court-approved settlement plan for payment of dues, adding to the Gurugram-based company's troubles.
If it finds that SpiceJet willfully failed to comply with its orders, the apex court has the power to punish the airline and Singh, who has also been summoned by the Delhi High Court for not filing an affidavit of assets and liabilities in the arbitration case with Sun Group’s Kalanithi Maran.
The setback came on the day the company announced a profit in the June quarter of the current fiscal. SpiceJet's reported a net profit of Rs 197.53 crore for the April-June period against a loss of Rs 789 crore in the year-ago period.
While sections of the media had earlier reported that Supreme Court has sought Singh's personal appearance before the bench, it was later clarified that such a directive has not been issued.
Reacting to the top court's decision to issue a contempt notice, SpiceJet said it has till date "paid a total of $7.1 million to Credit Suisse", and intends to pay the remaining amount of $4.4 million at the earliest.
"A settlement agreement had been reached between SpiceJet and Credit Suisse last year for an amount of $24 million. The debt, it should be noted, is an old one and predates the current Promoter taking over the company," the airline said in a statement.
"The payment of the settlement amount was subject to RBI approval. SpiceJet could not start the payment as per applicable schedule under the consent terms for a few months till RBI approval came...The shortfall of $4.4 million pertains to the period when RBI approval was still awaited. The Company intends to pay this ($4.4 million) and the remaining balance amount as per the applicable schedule," SpiceJet added.
Casefile
Credit Suisse, represented by senior advocate Siddharth Dave, told the court that SpiceJet had deposited $6.5 million that it should have by now.
SpiceJet's lawyer senior advocate Shyam Divan urged the court not to issue notice as it paid the bank $200,000 over and above the $500,000 it had undertaken to pay every month. The court, however, issued notice, saying that the creditor's confidence must be upheld.
The Supreme Court had been adjourning Credit Suisse's contempt plea on SpiceJet’s undertakings to continue paying $500,000 every month. This time, the court refused to adjourn the case without issuing a notice.
In May 2022, SpiceJet and Credit Suisse entered into an agreement to resolve a payment dispute, which arose after the airline failed to clear dues to SR Technics, a Switzerland-based company that provides aircraft maintenance services. SpiceJet defaulted on dues amounting to $20 million.
The Madras High Court had ordered the winding up of SpiceJet due to the dispute. The Supreme Court stayed the order on a plea by the airline and urged both parties to settle the dispute.
An agreement was reached in May 2022, requiring SpiceJet to make an upfront payment and the remaining balance over an agreed timeline.
In 2011, SpiceJet entered into a 10-year contract with another SRT Technics for engine maintenance, which, in turn, sold its right to receive payments under seven invoices to Credit Suisse in 2012.
SpiceJet stock ended the day at Rs 33.67 on the National Stock Exchange, up 6.72 percent from the previous close.
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