NCLT Delhi Permits Withdrawal Of Aviator ML 29641 Insolvency Plea Against SpiceJet, Imposes ₹15 Lakh Costs

The National Company Law Tribunal (NCLT), New Delhi, on 19 August allowed Aviator ML 29641 to withdraw its insolvency petition against SpiceJet Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016, but imposed costs of Rs. 15 lakh on both parties for seeking withdrawal after the matter had been reserved for orders.

A Bench of Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh allowed the withdrawal under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, but directed Aviator ML 29641 and SpiceJet Limited to pay Rs. 7.5 lakh each to the Prime Minister's National Relief Fund within seven days. The Tribunal observed:

“Therefore, at this stage, we are not inclined to consider and take into account or take on record the settlement agreement entered between the parties especially in view of the fact that the petition for initiation of CIRP against the same Corporate Debtor in other 7 matters are pending. Further, 4 other matters are pending for hearing. Therefore, we are not inclined to take into account the content of any settlement agreement or to take on record the settlement.”

Aviator ML 29641 had filed the petition under Section 9 of the IBC, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against SpiceJet Limited. The parties extensively argued the matter and the Tribunal directed them to file written submissions. The Bench reserved the petition for orders on 17 August 2026 along with seven other insolvency petitions against SpiceJet Limited. Before the pronouncement of the order, however, senior counsel appearing for both parties informed the Tribunal that they had settled the dispute and sought permission to withdraw the petition.

The Tribunal deferred pronouncement to 19 August 2026. Aviator ML 29641 also sought liberty to revive the petition in the event of a default under the settlement agreement.

It noted that it had reserved orders in the main petition along with seven other matters concerning the same corporate debtor and that four more matters remained pending for hearing. It therefore declined to consider or take the settlement agreement on record.

Further, the Bench observed that the petition had not been admitted and the proceedings consequently remained in personam, rather than in rem. It held that Aviator ML 29641, as the operational creditor, was therefore entitled to withdraw the petition if it no longer wished to pursue it.

However, the Tribunal found that the parties had sought withdrawal at a very late stage, after the matter had been argued and reserved for orders. It consequently imposed costs of Rs. 15 lakh, to be borne equally by Aviator ML 29641 and SpiceJet Limited, with each party required to deposit Rs. 7.5 lakh in the Prime Minister's National Relief Fund within seven days.

Accordingly, the NCLT allowed the withdrawal under Rule 8, but clarified that the order would take effect only after the parties produced proof of payment of costs before the Registry. If they failed to comply, the matter could be placed before the Bench again for further directions.

For Applicants: Senior Advocate Ramji Srinivasan with Advocates Anandh Venkataramani, Saket Salapathy, Anubhav Dutta, Ishita Thakur, Nikita Sharma, Kavya Kumar, Shefali,

For Respondents: Senior Advocate Krishnendu Datta with Advocates Sanjay Gupta, Aditi Pundhir, Manisha Sharma, Rishabh Wahi, Raghu Aggarwal, Niharika Sharma