NCLT pulls up SpiceJet for last-minute settlement in insolvency case; still defers order

The National Company Law Tribunal (NCLT) on Monday deferred the pronouncement of orders in eight insolvency petitions pending against SpiceJet after the airline disclosed a last-minute settlement with one of its aircraft lessors..The petitions have remained pending since 2024 and were extensively argued before a special bench comprising Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh. The tribunal was set to pronounce its orders today when the airline informed the bench about the settlement.The NCLT took exception to the same but nevertheless deferred 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 deferred the pronouncement in the petition filed by Aviator ML 29641 Limited to August 19. Orders in seven connected petitions were deferred to August 20 because the decision in Aviator ML’s case could have a bearing on them.The seven connected petitions were 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 made it clear that the orders in the remaining matters would not be deferred again..Aviator ML had moved the NCLT under Section 9 of the Insolvency and Bankruptcy Code (IBC), seeking initiation of the corporate insolvency resolution process against SpiceJet over an alleged default of ₹58.64 crore.The Tribunal had earlier completed hearing the matter and had fixed the matter for pronouncement of order today.However, when the case was called out, Senior Advocate Ramji Srinivasan, appearing for Aviator ML, and Senior Advocate Krishnendu Datta, representing SpiceJet, informed the Bench that the dispute has been settled..They said an application seeking withdrawal of the petition would be filed during the day and requested that the pronouncement be deferred.SpiceJet was stated to have admitted the debt and made an initial payment of $500,000 under the settlement agreement, which was executed overnight.The 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?” it asked. .Senior Advocate Kevic Setalvad and advocate Pranay Goel, appearing for creditors in connected petitions, strongly opposed any deferment of the remaining orders.Setalvad argued that a bilateral settlement in one case could not stall orders in matters involving other creditors.“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 said the creditors had incurred substantial costs while pursuing the cases for nearly two years and should not be forced to argue them afresh before another bench.Setalvad likened the situation to a “buy one, get eight free” arrangement and argued that it should not be permitted.Goel supported the objection and said parties could not reopen proceedings when cases had reached 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,” he said..The NCLT said it had repeatedly asked the parties during the hearings whether a settlement was likely. While SpiceJet had initially indicated that a settlement was possible, Aviator ML had consistently maintained that no settlement would take place.The Bench said it had consequently spent considerable time hearing the case and preparing its order.“It makes a mockery of the entire thing that we are wasting our time. This kind of thing we will not accept.”The Bench added that it was not opposed to parties resolving their disputes but that a settlement should be disclosed at the appropriate stage.“We are not against any settlement. However, it has to be done at a proper time.”In the order dictated in open court, the NCLT recorded its disapproval of the parties’ conduct.However, it deferred its orders in view of the settlement.