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NCLAT dismisses insolvency plea against SpiceJet

Monday, May 13, 2019

The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea for initiation of insolvency proceedings against Spicejet by Ramco Systems Ltd, an operational creditor of the low-cost carrier.

A two-member bench headed by Chairman Justice S J Mokhopadhaya upheld the orders passed by the National Company Law Tribunal (NCLT) in this matter saying that it has rightly rejected Ramco's plea by observing that such petition requires strict proof of debt and default, which was absent in this case.

The appellate tribunal said there was nothing on record to suggest that the demand notice relating to invoices issued by Ramco System was forwarded or received by Spicejet. "For the reasons aforesaid, no relief can be granted," said NCLAT. Ramco Systems had entered into agreement with Spicejet to provide 'Aviation Software Solutions' in May, 2013. Later in July 2014, 'Change Order Demand' was executed between the parties. The earlier 'Software Licence Agreement' for 180 number of authorised users were amended to 55 aircraft tails and unlimited users with other amendment and modification which also followed various modification and alteration.

Ramco Systems counsel claimed before the NCLAT that a huge amount is payable by Spicejet and invoice for Rs 62.89 lakh was intimated to them and sent by email on January 2016.

Rejecting it, Spicejet claimed before the NCLAT that all claims depended on invoices for the financial year 2013-14, including the invoice dated July 23, 2014. This was due and payable by August 22, 2014 and said that it was barred by limitation.

Moreover, the demand notice was issued by Ramco Systems on April 24, 2017, without attaching the invoices relating to debt which are payable. It further contended that two demand notices dated July 23, 2014 for amount Rs 59.83 lakh and Rs 33.70 was never issued by Ramco Systems.

Consenting to it, the NCLAT said: "There is nothing on the record to suggest that the invoices dated July 23, 2014 were forwarded or received by Spicejet."

"... in absence of specific evidence relating to invoices actually forwarded by the Appellant and there being a doubt, we hold that the Adjudicating Authority (NCLT) has rightly refused to entertain application under Section 9 which requires strict proof of debt and default," said the NCLT.

Ramco Systems has moved the NCLAT after the National Company Law Tribunal has dismissed its insolvency plea on December 14, 2017.

The NCLT had dismissed Ramco System's application on the ground of inconsistency in the overall payments and the non-compliance with the provisions by the operational creditor, in the absence of a certificate from the financial institution maintaining its accounts.

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