Spice Jet is liable to wound up for its inability to pay its debts

Issue  

Company Petition filed before Madras HC under Section 433(e) and (f) with Section 434 (1) (a) and 439 (1) (b) of the Companies Act, 1956, praying for: 

1. Order to winding up of the respondent under the provisions of the Companies act, 1956;

2. Appoint the Official Liquidator, under Section 448 of the Companies Act, 1956 to take charge of the assets, properties, stock in trade and books of accounts of the Company.

Facts  

• The petitioner, is a stock corporation registered under the Laws of Switzerland, seeking for winding up of the respondent for the alleged inability to pay the debts under Section 433 (e) and (f) read with Sections 434 and 439 of the Companies Act, 1956.  
• According to the petitioner, the respondent is a private Sector Airline had availed of the services of a Company named SR Technics, Switzerland, for maintenance, repair and overhauling of Air Craft Engines, modules, components, assemblies and parts which are mandatory for its operations. 
• The respondent and S.R.Technics entered into an agreement for performance of above services for a period of 10 years. A supplemental agreement was entered into to change certain terms of the agreement for payment of monies due under various invoices raised by SR Technics and also a deferred payment scheme.  
• SR Technics had raised invoices for the monies due and the respondent had issued seven bills of exchange. The respondent also acknowledged the debts from time to time by issuing certificate of acceptance in relation to the bills of exchange.  
• The petitioner namely Credit Suisse AG, entered into a financing agreement on 26.09.2012 with SR Technics and under a transaction agreement dated 26.09.2012, SR Technics assigned all its present and future rights to receive payments under the agreement to the petitioner where the petitioner is entitled to receive payments of the monies due under the seven Invoices from the respondent.  
• The petitioner has been Claiming the failure on the part of the respondent to pay the monies due, despite issuance of a notice under Sections 433 and 434 of the Companies Act, 1956, would tantamount to inability to pay the debts making the respondent liable for winding up under Section 433 (e) of the Companies Act 1956, the petitioner has come up with this Company Petition.  

Findings   

Supplemental agreement dated 24.08.2012 shows that the execution of the bills of exchange in support of the invoices and the execution of the certificates of acceptance have been done by the respondent Company in order to avail the benefit of a six months deferred payment scheme. Therefore, it is clear that the respondent Company had obtained an advantage of a deferred payment by execution of these documents and the denial cannot be said to be bona fide. Having obtained an advantage under the supplementary agreement and having executed the documents as required, the respondent cannot now seek to evade liability raising technical objections relating to stamping of the instruments.  

SR Technics did not have a valid authorization from DGCA to carry out engine maintenance contracts between 01.01.2009 and 18.05.2015. All the invoices which are now in dispute or during that period only. 

Also, the respondent Company has miserably failed to satisfy the three-pronged test suggested by the Hon’ble Supreme Court in Mathusudan Gordhandas & Co. v. Madhu Woollen Industries (P) Ltd., supra, 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.  

Judgement  

Madras HC held that this Company Petition should be allowed and the respondent Company directed to be wound up. The Official Liquidator is directed to take over the assets of the respondent Company. Consequently, the connected miscellaneous petitions are closed. The respondent Company has miserably failed to satisfy the three pronged test suggested by the Hon’ble Supreme Court in Mathusudan Gordhandas & Co. v. Madhu Woollen Industries (P) Ltd., supra, 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.

To Read the Judgement Download the PDF Given Below: