Delhi HC asks SpiceJet to pay Rs 50 cr or face grounding of two engines

Justice Pratibha Singh instructed the SpiceJet counsel to obtain guidance by May 3 regarding the feasible time period for SpiceJet to pay Rs 50 crore to its lessors

The Delhi High Court, on Wednesday, granted SpiceJet a final chance to settle a payment of Rs 50 crore to its engine lessors, Team France and Sunbird France. If the airline fails to meet this obligation, it risks having two of its engines grounded, according to a report in The Economic Times (ET).

Justice Pratibha Singh instructed the counsel representing SpiceJet to obtain guidance by May 3 regarding the feasible time period for the low-cost carrier to pay Rs 50 crore to its lessors. Additionally, the airline was asked to determine if the engine that was already out of operation could be returned to the lessors.

Currently, the total outstanding amount stands at $10.84 million. Since the filing of the lawsuit in December last year, SpiceJet has already paid more than $5 million, the report said.

Issuing a firm warning to SpiceJet regarding its overdue payments, the judge stated that if the outstanding amount remains unpaid, the airline will be compelled to have two of its engines grounded.

The High Court observed that, based on its previous actions, the airline defaulted on paying the user charges. It noted the assertions made by SpiceJet's counsel that the airline is fully committed to settling the dues. The counsel argued that any adverse rulings, including grounding the engines, would not be beneficial and would instead increase the airline's financial troubles by reducing its revenue streams, the ET reported.

In December last year, Team France 01 SAS and Sunbird France 02 SAS moved the High Court, claiming that SpiceJet had failed to fulfil its past financial obligations to them for over two years. They sought an injunction to prevent SpiceJet from using their three engines following the termination of the lease agreement, as well as compensation for the outstanding dues, the ET report stated.

The lessors of the engines requested the High Court to instruct SpiceJet to surrender the engines to them.

Last month, three lessors of SpiceJet — AWAS 36698 Ireland, AWAS 36694 Ireland, and AWAS 36695 Ireland — filed a petition with the National Company Law Tribunal to initiate insolvency proceedings against the airline, citing an alleged default on rental payments amounting to Rs 77 crore. Following the complaint, the tribunal, on April 18, served SpiceJet a notice requiring a response within two weeks.

Pramod Nair, a senior advocate representing the lessors, informed the court that the petition was based on a ruling from the High Court of Justice in London and the contractual agreement between the involved parties.