Wednesday, July 20, 2022

Supreme Court asks Credit Suisse to rethink decision to allow SpiceJet to withdraw $5-million bank guarantee

The Supreme Court on Tuesday asked Credit Suisse AG to rethink its decision to allow low-cost carrier SpiceJet to withdraw its $5-million bank guarantee, which is in custody of the Madras High Court.

The low-cost carrier had arrived at an “in-principle commercial settlement” with the Switzerland-based investment banking company in the $24-million dispute between the two parties.

While both SpiceJet and Credit Suisse asked a bench led by Chief Justice NV Ramana to take on record the consent terms, which was executed on May 23, towards settlement of their disputes, the airline also sought a direction to the HC to release its bank guarantee, saying that the collateral given for the guarantee is required to pay the dues as per the settlement terms.

However, the CJI asked Credit Suisse counsel Liz Mathew to rethink its stand and said the apex court will not intervene later in case SpiceJet refused to pay up after withdrawal of the bank guarantee. It also posted the matter for further hearing next week.

The apex court had earlier asked SpiceJet to resolve its dispute with Credit Suisse AG and had stayed the HC’s order that allowed a winding up of the low-cost airline.

SpiceJet had challenged the HC order of January 11, allowing the winding-up petition filed by Credit Suisse against the company for default of about $24 million. The HC had also directed the official liquidator to take over the assets of SpiceJet.

The Swiss company had filed a winding-up case against the airline for failing to honour some invoices raised for over $24 million towards payment of maintenance, repairing, and overhauling of the aircraft engines and components in 2013. However, the apex court, on Spicejet’s appeal, had put the HC order on hold and asked the airline to settle the case with Credit Suisse.

The airline had in November 2011 entered into a 10-year contract for servicing of aircraft with Swiss engine maintenance services firm SRT Technics, which, in turn, sold its right to receive payments based on the contract to Credit Suisse in September 2012.

20/07/22 Indu Bhan/Financial Express

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