The Supreme Court dismissed the Delhi High Court’s ruling on Friday, ordering low-cost airline SpiceJet to ground three aircraft engines because lessor payments were outstanding. A panel made up of Justices J B Pardiwala, Manoj Misra, and Chief Justice D Y Chandrachud dismissed SpiceJet’s appeal against the high court’s decision on September 11. “We’re not going to get involved. The bench declared that it was the proper sequence.
A SpiceJet representative stated that the business is now in talks with the aircraft lessor to seek a mutually agreeable resolution after the court’s ruling. It’s crucial to remember that two of the three engines in concern have already been grounded, and our business as usual is unaffected. As always, our goal is to guarantee flawless operations,” the SpiceJet representative stated.
The low-cost airline was ordered to stop operating all three engines by a single judge court due to payment arrears, but a division bench of the Delhi High Court overruled the decision, finding that the company had violated a temporary payment agreement.
What had happened? SpiceJet was ordered by the single-judge bench of the high court on August 14 to turn over three of its engines to their lessors, Sunbird France 02 SAS and Team France 01 SAS, by August 16. The high court’s division bench denied SpiceJet’s arguments against the single-judge bench’s August 14 decision to halt the three aircraft engines and turn them over to the lessors. The division bench also declined to get involved.
SpiceJet has challenged the August 14 ruling of the one-judge panel. The arguments represent the proverb that says, “Wise men use their assets, and fools create them.” The high court had stated that “the use of a lessor’s assets by the lessee without compensation, on agreed terms, often leads to consequences which disrupt the interests of both sides.”
The high court declared that SpiceJet was in default and that there were still bills that needed to be paid from the past and present. The records made this clear. “It is imperative to emphasise that SpiceJet has breached an interim arrangement for payment of dues that was agreed upon. The arrangement included a term that upon breach, SpiceJet would ground the engines, which Team France and Sunbird France could then repossess,” the statement said.
The top court satisfied the second need by stating that SpiceJet’s depreciating engines would not benefit lessors without compensation. The court emphasized SpiceJet’s financial situation is precarious, and Team France and Sunbird France may face without engines or money under lease agreements.
SpiceJet is facing a lawsuit from lessors who have requested the company to transfer ownership of three engines after lease agreements expire. The court ruled that the airline would still be liable for $4.8 million in outstanding payments and weekly payments due to the use of the engines. The plaintiff is entitled to recover the amount through the execution of the order dated May 29, 2024.
What did the airline say? The airline’s legal representative had mentioned in their response to the petitions that the defendant made payments totalling $7.18 million from December 14, 2023, to May 24, 2024, after the litigation was started. The lawyer claims that after the settlement terms were filed in court, the airline paid $1.48 million.
A $2.67 million recognised default was noted as of August 12 about the outstanding debt. Despite acknowledging the default, he said the defendant is working to make these more frequent and has asked for an extension of time until September 30 to pay the outstanding debt.
