NCLT Criticizes SpiceJet’s Last-Minute Settlement, Delays Insolvency Order
The National Company Law Tribunal (NCLT) has postponed its decision on eight insolvency petitions against SpiceJet, following the airline’s eleventh-hour settlement with an aircraft lessor. The petitions, pending since 2024, were thoroughly debated before a special bench consisting of Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh. The tribunal was poised to issue its ruling when SpiceJet announced the settlement, prompting the NCLT to express its dissatisfaction but ultimately defer its orders.
“We do not appreciate the conduct of the parties for coming out with the settlement at this stage when the judgment is to be pronounced… Precious judicial time has been wasted in the arguments by both the sides,” the Tribunal remarked. The pronouncement in the case brought by Aviator ML 29641 Limited is now scheduled for August 19. Decisions in seven related petitions will follow on August 20, as the outcome of Aviator ML’s case might influence them. These petitions include those filed by AWAS 36698 Ireland Limited, AWAS 36694 Ireland Limited, AWAS 36695 Ireland Limited, Falgu Aviation Leasing Limited, Sabarmati Aviation Leasing Limited, JetAir 17 Limited, and Alterna Aircraft V B Limited. The Bench emphasized that this delay would not be repeated for the remaining matters.
Aviator ML initiated proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC), alleging a default by SpiceJet amounting to ₹58.64 crore. The Tribunal had concluded hearings and was set to pronounce its order when Senior Advocates Ramji Srinivasan and Krishnendu Datta, representing Aviator ML and SpiceJet respectively, informed the Bench of a settlement. They announced plans to file an application to withdraw the petition and requested a postponement of the pronouncement. SpiceJet reportedly acknowledged the debt and made an initial payment of $500,000 as part of the settlement agreement, reached overnight. This timing drew sharp criticism from the Bench.
“Why were you waiting till the time that we put it for pronouncement is what we don’t understand?” the Bench inquired. Senior Advocate Kevic Setalvad and advocate Pranay Goel, representing creditors in associated petitions, strongly opposed delaying the other orders. Setalvad argued that a bilateral settlement in one case should not impede the orders in unrelated matters. “I don’t think, with the utmost respect, that this settlement, coming in at the 18th hour, so to speak, should have any bearing on the other matters,” he stated. He emphasized that creditors had incurred significant costs pursuing these cases for nearly two years and should not have to re-argue them before another bench. Setalvad compared the situation to a “buy one, get eight free” scenario, arguing against its permissibility. Goel backed the objection, stating that parties could not reopen proceedings at the pronouncement stage. “Your Lordships must go ahead and pronounce all the matters listed today. Whatever consequences follow, we don’t know whether petitions are going to be admitted or dismissed. The consequences will follow,” Goel insisted.
The NCLT noted that it had repeatedly inquired whether a settlement was possible during hearings. While SpiceJet initially suggested it was, Aviator ML consistently denied any possibility. The Bench lamented the time spent on hearings and order preparation, remarking, “It makes a mockery of the entire thing that we are wasting our time. This kind of thing we will not accept.” The Bench clarified that while it is not opposed to dispute resolution through settlements, timing is crucial. “We are not against any settlement. However, it has to be done at a proper time,” they affirmed. In its order dictated in open court, the NCLT recorded its disapproval of the parties’ conduct but deferred its orders in light of the settlement.
