NCLT's Strong Rebuke to SpiceJet
The National Company Law Tribunal (NCLT) has issued a stern warning to SpiceJet, criticizing the airline for a last-minute payment of ₹4.78 crore (approximately $500,000) to one operational creditor, Aviator ML 29641 Ltd. The tribunal has given SpiceJet just two days to settle outstanding dues with its remaining seven creditors, emphasizing that the payment to a single party cannot delay other insolvency proceedings.
A special NCLT bench, comprising Justice Mahendra Khandelwal and technical member Anu Jagmohan Singh, expressed strong disapproval of SpiceJet's conduct. "This kind of thing is very wrong, you know. It's a mockery of the entire system," the bench stated, highlighting that the case had been pending since 2024 with repeated calls for settlement.
Court's Frustration Over Delayed Disclosure
The NCLT bench voiced frustration over the airline's decision to disclose the settlement only on the day the order was to be pronounced. "Precious judicial time has been wasted in the arguments by both sides," the court noted, pointing out that it had frequently urged SpiceJet to explore settlements earlier in the process.
Lawyers representing the other operational creditors vehemently opposed any delay in their cases. One counsel argued that the settlement, coming "at the 18th hour," should not impact the other petitions. Another lawyer sarcastically described SpiceJet's strategy as "buy one get eight free," asserting that the airline could not use one settlement to postpone others.
SpiceJet's Ongoing Financial Challenges
The NCLT action comes amidst ongoing financial pressures for SpiceJet. The airline reported a significant net loss of ₹1,138.15 crore for the first nine months ending December 31, compared to a loss of ₹266.8 crore in the previous year. Revenue from operations also saw a 14% decline to ₹3,271.5 crore during the same period.
SpiceJet's market share has also fallen, dropping to 1.9% in June from 3.9% at the start of the year. The airline is yet to announce its full fiscal year 2026 results and its January-March quarter earnings. Its shares have experienced a substantial 61% decline this year, contrasting with a 7.22% fall in the Nifty 50 index.
The eight insolvency petitions were filed in 2024 under Section 9 of the Insolvency and Bankruptcy Code (IBC), which allows operational creditors to initiate insolvency proceedings in cases of payment defaults.