SpiceJet “has miserably failed to satisfy the three pronged test suggested by the Supreme Court in Mathusudan Govardhandas & Co Vs Madhu Woollen Industries, and hence had rendered itself liable to be wound up for its inability to pay its debts under Section 433 (e) of the Companies Act 1956,” the high court said in its order.

The Madras High Court has ordered the winding up of SpiceJet and asked the official liquidator to take over the low-cost airline’s assets in a case related to non-payment of unpaid dues of around $24.01 million to Swiss stock corporation Credit Suisse AG.

While directing winding up of the carrier, Justice R Subramanian, however, kept his order in abeyance for three weeks, if SpiceJet deposits $5 million within two weeks. In a filing to stock exchanges on Tuesday, SpiceJet said it will soon initiate “appropriate remedial steps including preferring an appeal” against the order before a higher bench “within the time frame allowed by the Madras High Court.”

“The company believes it has a good case on merits and is hopeful of having favourable outcome in the appeal,” it said.

SpiceJet “has miserably failed to satisfy the three pronged test suggested by the Supreme Court in Mathusudan Govardhandas & Co Vs Madhu Woollen Industries, and hence had rendered itself liable to be wound up for its inability to pay its debts under Section 433 (e) of the Companies Act 1956,” the high court said in its order.

The Madras HC had rejected the airline’s stand that SR Technics did not have a valid licence to carry out aircraft maintenance services from the Director General of Civil Aviation as required under the Aircraft Act and, therefore, the enforcement of the claim would be against public policy. —FE

Source: Indianexpress