When can a court admit a winding up petition under Section 433?

When a company is unable to pay its debts, and there is no genuine, substantial dispute about the debt. The court still considers the company’s defence before admission.

What defence did SpiceJet raise?

Among others, it argued issues about stamping and S.R. Technics’ DGCA licence. The High Court found these not bona fide to resist admission.

Does non-stamping of documents defeat a winding up petition?

No. The court focuses on the authenticity of the debt and the seriousness of the defence, not merely on stamping objections at admission stage.

Is a petition automatically admitted once debt is alleged?

No. The Company Court must evaluate if the company raises a real and substantive dispute. If the dispute is genuine, admission can be refused.

What is the practical takeaway?

If the debt is clear and the defence is weak or afterthought, admission of winding up can follow—even when the company is large or in a sensitive sector.

SpiceJet Limited v. Credit Suisse AG

Madras High Court

2022

2022 1 Comp LJ 410 (Mad)

Insolvency • Company Law

~8 min read

Section 433 winding up inability to pay debts bona fide dispute test Madras High Court

Author: Gulzar Hashmi LOCATION: India PUBLISH_DATE: 23 Oct 2025 Slug: spicejet-limited-v-credit-suisse-ag

Quick Summary

SpiceJet used S.R. Technics for engine maintenance. To defer payments, it involved Credit Suisse, which paid S.R. Technics against accepted documents. SpiceJet did not repay Credit Suisse. Credit Suisse filed for winding up. The Madras High Court upheld admission of the petition. Reason: the debt stood; SpiceJet’s defence was not genuine.

PRIMARY_KEYWORDS: Section 433 winding up, inability to pay debts
SECONDARY_KEYWORDS: bona fide dispute, Credit Suisse, SpiceJet, S.R. Technics
PUBLISH_DATE: 23-10-2025
AUTHOR_NAME: Gulzar Hashmi
LOCATION: India

Issues

Is the Company Court bound to admit a petition under Section 433 (Companies Act, 1956)?
How should the court weigh a company’s defence when debt is alleged?
Do objections like non-stamping or supplier licensing defeat admission?

Rules

Section 433 (Companies Act, 1956): Tribunal/Court may order winding up if the company is unable to pay its debts.
Admission test: Petition is not automatic. Court examines if the company’s defence shows a genuine, substantial dispute. If yes, no admission; if not, admission may follow.
Procedural objections: Non-stamping or similar technicalities do not by themselves defeat admission where debt authenticity is evident.

Insolvency Company Law

Facts (Timeline)

24 Nov 2011: SpiceJet signs 10-year engine maintenance agreement with S.R. Technics (Switzerland).

Deferment phase: SpiceJet asks to defer invoice payments; Credit Suisse agrees to pay S.R. Technics.

Security docs: Bills of exchange & certificates of acceptance given to Credit Suisse; payments made to S.R. Technics.

Default: SpiceJet fails to repay Credit Suisse.

Company Court: Single Judge admits winding up petition.

Appeal: Division Bench (Madras HC) rejects SpiceJet’s appeals; stay continued briefly to allow further challenge.

Arguments

Appellant: SpiceJet

Debt disputed; issues with stamping of documents.
S.R. Technics lacked DGCA licence; hence no liability.
Admission of petition was mechanical and harsh.

Respondent: Credit Suisse

Debt is clear: payments made against accepted instruments.
Defences are afterthoughts; not bona fide.
Winding up admission proper under Section 433.

Judgment

Division Bench rejected SpiceJet’s appeals. The stay on the winding up order continued for a limited time to permit further challenge, but the core finding stood: the debt was authentic; SpiceJet’s defence lacked bona fides. Non-stamping and DGCA licence objections did not defeat admission at this stage.

Ratio (Key Rule)

Winding up under Section 433 is not automatic. The court first asks: is there a genuine, substantial dispute? If the debt is clear and the defence is flimsy or inconsistent, admission is justified.

Why It Matters

Reinforces the “bona fide dispute” filter at admission stage.
Shows that technical objections cannot mask a real default.
Important for cross-border vendor finance and aviation maintenance deals.

Key Takeaways

Section 433 empowers winding up when debts are unpaid.
Court weighs the quality of defence, not its volume.
Non-stamping & licence points did not defeat a clear debt here.
Inconsistent “hot–cold” stances harm a company’s credibility.

Mnemonic + 3-Step Hook

Mnemonic: “DEBT CLEAR? ADMIT NEAR.”

Debt: Identify authentic, proved liability.
Dispute: Is it bona fide and substantial?
Decision: If not, admission under s.433 is proper.

IRAC Outline

Issue

Should a winding up petition against SpiceJet be admitted under Section 433 when Credit Suisse’s debt stands and defences are raised?

Rule

Admission depends on inability to pay and absence of a genuine, substantial dispute; technical objections alone are insufficient.

Application

Payments made by Credit Suisse were supported by accepted instruments; SpiceJet’s stamping/licence objections were inconsistent and weak.

Conclusion

Appeals rejected; admission of the petition sustained; limited stay continued only to allow further challenge.

Glossary

Winding Up: Court process to end a company and pay creditors from assets.
Bona Fide Dispute: A real, substantial disagreement on liability or amount—not a sham defence.
Bills of Exchange: Written orders binding one party to pay a fixed sum to another on demand or at a set time.