Synopsis : The Delhi Bench of the National Company Law Tribunal (NCLT) has allowed aircraft lessor Aviator ML 29641 Limited to withdraw its insolvency plea against SpiceJet after both parties reached a settlement. However, the tribunal imposed a combined cost of Rs 15 lakh on the parties, directing each side to contribute Rs 7.5 lakh to the Prime Minister's National Relief Fund.
The order was passed by a special Bench comprising Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh. The tribunal said the withdrawal would become effective only after both parties submit proof of payment to the tribunal registry within seven days. If the required proof is not filed, the matter could be relisted.
The insolvency proceedings originated in 2024 when Aviator ML initiated proceedings under Section 9 of the Insolvency and Bankruptcy Code against SpiceJet, alleging a default of Rs 58.64 crore. The petition was one of several insolvency cases filed against the airline and had been heard alongside seven other petitions involving claims by different creditors.
The matter had reached an advanced stage, with the tribunal originally scheduled to pronounce its order on August 17. However, before the judgment could be delivered, SpiceJet and Aviator ML informed the NCLT that they had entered into a settlement agreement.
According to the proceedings, SpiceJet had made an initial payment of $500,000 as part of the settlement. The parties subsequently requested the tribunal to take the settlement on record and sought permission to revive the insolvency proceedings if SpiceJet failed to comply with the agreed terms.
The NCLT, however, declined to include the settlement conditions or any revival mechanism in its order. The tribunal said its jurisdiction was limited to dealing with insolvency proceedings and that it could not supervise or enforce a private settlement between the parties.
As a result, the tribunal allowed only an unconditional withdrawal of the insolvency petition.
Senior advocate Ramji Srinivasan appeared for Aviator ML, while senior advocate Krishnendu Datta represented SpiceJet. The lawyers requested the tribunal to at least acknowledge that a settlement had been executed between the parties, but the Bench declined to incorporate the terms of that agreement into its order.
The tribunal also considered the procedural position of the case. Since the insolvency petition had not yet been admitted, the Bench held that the proceedings remained a matter between the parties rather than a proceeding affecting all stakeholders. This allowed the withdrawal under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
While permitting the withdrawal, the tribunal expressed displeasure over the timing of the settlement. The Bench noted that the seven other insolvency petitions against SpiceJet had been heard together for almost two years and that the connected cases were linked to the outcome of Aviator ML's petition.
The tribunal observed that resolving one petition at the final stage had disrupted the adjudication process for the remaining cases. It therefore withdrew the orders that had been reserved in the seven other insolvency petitions and directed that those matters be placed before the regular Bench for fresh consideration.
The development provides some relief to SpiceJet, which has been dealing with multiple financial and legal challenges as it attempts to rebuild its operations. The airline has faced disputes with aircraft lessors and other creditors over unpaid dues, while simultaneously working to restore grounded aircraft and expand its operational fleet.
Reacting to the NCLT order, a SpiceJet spokesperson welcomed the decision and said the petition filed by Aviator ML had been disposed of as withdrawn. The airline also said the seven other claims would now be heard afresh in accordance with due process.
SpiceJet said it viewed the development as a positive step towards resolving its outstanding matters and reiterated its commitment to working with partners and stakeholders to find mutually acceptable solutions.
The airline has been attempting to strengthen its financial position while rebuilding its fleet and operations following a prolonged period of difficulties. Its ability to resolve outstanding disputes with lessors and creditors remains important to its plans for a broader operational recovery.
For SpiceJet, the withdrawal of the Aviator ML insolvency petition removes one immediate insolvency proceeding. However, the seven other petitions that have been sent back for fresh consideration mean that the airline's legal and financial challenges are not yet fully resolved.
The NCLT's decision also highlights the importance of timing when parties settle insolvency disputes. In this case, the tribunal specifically took issue with the settlement being reached after the matter had already been reserved for orders, particularly because the outcome could have affected the connected insolvency petitions.
The next stage will therefore depend on the fresh hearing of the remaining seven petitions before the appropriate regular Bench. The outcome of those proceedings could have further implications for SpiceJet's financial position and its efforts to restore its fleet and strengthen operations.
For now, the withdrawal of Aviator ML's petition gives the airline some breathing room, while the broader insolvency proceedings continue to be assessed through the legal process.
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