“Supreme Court Issues Stern Warning to SpiceJet Chief Over Payment Default to Credit Suisse”

The Supreme Court of India has taken a strong stance against Ajay Singh, Chairman and Managing Director of SpiceJet, cautioning that failure to adhere to its payment directive to global investment bank Credit Suisse AG could result in his imprisonment. The court has instructed Mr. Singh to remit $500,000 as an installment to the Swiss firm, in addition to the defaulted amount of $1 million.

Strict Warning from the Bench

A bench comprising Justices Vikram Nath and Ahsanuddin Amanullah expressed dissatisfaction with the delay in compliance, cautioning that it may proceed to take drastic measures. The bench made it clear that it is not concerned even if SpiceJet ceases its operations, and it is willing to enforce severe consequences if Mr. Singh does not fulfill the court’s orders. The court’s firm stance was articulated during a hearing on Monday.

Background of the Dispute

The dispute revolves around services provided by SR Technics, Switzerland, for the maintenance, repair, and overhaul of SpiceJet’s aircraft engines, modules, components, assemblies, and parts. An agreement between SpiceJet and SR Technics was signed in 2011, specifying the terms of payment for these services. SR Technics had authorized Credit Suisse to receive payments from SpiceJet on its behalf.

The Supreme Court had granted SpiceJet additional time to make the payment to Credit Suisse, based on consent terms agreed upon by both parties, during a hearing on July 25.

Contempt Proceedings

Credit Suisse had petitioned the Supreme Court, seeking the initiation of contempt proceedings against Ajay Singh and SpiceJet for their alleged “wilful and intentional disobedience” of court orders and their failure to settle dues as per a prior settlement.

In its August 14 order, the court noted that while over $6.5 million was due, only a little over $2 million had been deposited by SpiceJet.

Resolution and Settlement

SpiceJet and Credit Suisse had informed the Supreme Court on August 18, 2022, that they had reached a financial settlement, leading to the withdrawal of SpiceJet’s appeal against a Madras High Court order for its winding up due to alleged non-payment of dues to the Swiss firm. The court had directed both parties to abide by the consent terms and had allowed the application for withdrawal.

The court’s recent warning underscores the seriousness with which it views compliance with court orders and settlement agreements, emphasizing the need for timely resolution of financial disputes.

Sources By Agencies

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