SC's contempt notice to SpiceJet's Ajay Singh in Credit Suisse case

The apex court on July 25 had given additional time to the airline to pay its dues to Suisse as part of the court-agreed settlement between both parties.

The Supreme Court issued a contempt notice against SpiceJet Chairman and Managing Director (CMD) Ajay Singh on Monday due to his failure to honour the court-approved payment of dues in the $24 million dispute with Swiss firm Credit Suisse.

Singh has been given four weeks to respond to the notice.

On July 25, the apex court granted the airline additional time to pay its dues to Credit Suisse as part of a court-agreed settlement between the two parties.

"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 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. Till date, SpiceJet has paid a total of $7.1 million to Credit Suisse. 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," a SpiceJet spokesperson said.

 

SpiceJet reported a net profit of Rs 205 crore for the first quarter of the current financial year (Q1FY24), according to a BSE filing.

The airline had incurred a net loss of Rs 789 crore in the same period the previous year.

Senior Advocate Niranjan Reddy, representing Credit Suisse, informed the court during the last hearing that the outstanding amount was $3.9 million when they filed the contempt plea. However, it had increased to $4 million after SpiceJet skipped a payment installment.

Senior Advocate Shyam Divan, representing SpiceJet CMD Ajay Singh, assured the court that they would continue paying $500,000 on the 15th of each month. Divan stated that SpiceJet had already paid over $160 million to Credit Suisse, and he would consult his clients to consider increasing the monthly installment beyond $500,000.

In 2011, the airline had entered into a 10-year contract with Swiss maintenance firm SRT Technics for aircraft servicing. SRT subsequently assigned its right to recover payment for maintenance to Credit Suisse in 2012.

Credit Suisse, acting as a third party under the agreement, pursued the recovery of dues from the airline, relating to seven invoices raised by SRT. When SpiceJet allegedly failed to pay its dues, Credit Suisse filed a plea in the Madras High Court to recover the outstanding amount.

The Swiss firm had lodged a plea against the airline in the High Court in 2013, seeking non-payment of over $24 million for aircraft engine and component maintenance, repairs, and overhauls. The apex court intervened, halting the High Court's order to wind up the airline and urging both parties to reach a settlement.

In a separate matter, Singh has been directed by the Delhi High Court to appear in court on August 24 for not submitting an affidavit of assets and liabilities in the arbitration case involving Sun Group's Kalanithi Maran.