Thursday, August 17, 2023

CEO of India's SpiceJet faces contempt charges

Ajay Singh, the Chief Executive Officer (CEO) of SpiceJet (SG, Delhi International), is facing contempt charges brought by Credit Suisse, which has resulted in India's Supreme Court ordering him to appear in person next month, according to Reuters.

Credit Suisse's proceedings against Singh and SpiceJet, which commenced in March, allege the CEO displays "a willful and intentional disobedience" of court orders and payment agreements. The financial entity's court filing says SpiceJet and Singh have not complied with a 2022 in-principle commercial settlement that would have drawn a line under a long-running USD24 million dispute.

Credit Suisse filed a liquidation petition against the low-cost carrier after it failed to pay maintenance and servicing invoices dating from early last decade. In 2011, SR Technics signed a ten-year contract to service and maintain SpiceJet's aircraft, but the arrangement soon soured as invoices went unpaid. In 2012, SR Technics sold the right to receive payments for invoices to Credit Suisse. Legal proceedings over the unpaid invoices have been underway since 2015.

Last January 2022, the Madras High Court found in Credit Suisse's favour and ordered the liquidation of SpiceJet. However, the airline appealed to the Supreme Court and eventually settled the dispute. But Credit Suisse was back in the Supreme Court in March this year, alleging SpiceJet had not been paying as per the agreed schedule (USD500,000 per month) and was then USD6.5 million in arrears.

This week, Shyam Divan, appearing for SpiceJet, told the Supreme Court the airline had been meeting its monthly repayment obligations since April, reducing the outstanding balance to USD4.4 million. Earlier this month, the airline paid an additional USD200,000 over and above the agreed amount. While the court had previously shown some tolerance for SpiceJet's disregard of orders and settlement terms, it was less tolerant this week, accepting Credit Suisse's contempt petition, ordering Singh to respond in person within four weeks. The punishment for contempt charges is a fine and/or six months imprisonment.

17/08/2023 ch-aviation

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