Airline SpiceJet is set to be liquidated to pay more than $21 million owed in debt to Switzerland-based firm Credit Suisse AG. The Madras High Court on Monday directed the official liquidator to take over SpiceJet assets and start the process of winding up.

SpiceJet had entered into a contract for maintenance, repair and overhaul of aircraft with SR Technics Ltd in 2011. In 2012, the financial company Credit Suisse AG had signed a financing agreement with SR Technics, under which Credit Suisse was assigned the rights to receive payments.

The banking institution had issued multiple notices over time to SpiceJet asking for payment.

The bench of Justice R Subramanian held that Class (e) of Section 433 of the Companies Act provides for winding up a company, if the company is unable to pay its debts.

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“Section 434 of the Companies Act states as to when a company can be deemed to be unable to pay its debts,” the bench said.

The bench also noted that there was “categorical admission of debt” by the airline, even though it opposed the plea for winding up by claiming that the documents were not “stamped documents” under the Indian Stamp Act.

“Even ignoring the agreements and the bills of exchange, the certificates of acceptance that had been issued by the respondent would show that there is a categorical admission of liability. Each of the bills of exchange is supported by a certificate of acceptance,” the bench noted.

“Therefore, it is clear that the respondent company had obtained an advantage of a deferred payment by execution of these documents and the denial thereof, in my considered opinion, 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,” it added.

The bench also dismissed the objection raised by SpiceJet that Credit Suisse does not have approval of the DGCA to enter into agreement with airlines. The bench has held that the airline was aware of the status at the time of signing the agreement, but chose not to terminate the contract. “

The termination of the contract by itself would not relieve SpiceJet of its liability” even if the contract had actually been terminated, the bench held.