SC to hear SpiceJet plea against HC order grounding engines

SpiceJet had challenged the Delhi High Court’s August 14 order. Representational pic

The Supreme Court on Thursday said that it will hear SpiceJet's appeal against a recent Delhi High Court verdict that had directed the debt-ridden airline to ground three of its aircraft engines "due to non-payment of dues to its lessors".

A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra suggested that SpiceJet's counsel circulate an email seeking an urgent hearing on the matter.

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The order comes after the low-cost airline moved the apex court after the high court on Wednesday (September 11) upheld its order to ground three of its engines, citing missed payments as the primary reason. The airline currently operates 21 aircraft.

Delhi HC verdict

The legal battle began after a single-judge bench of the Delhi High Court on August 14 ordered SpiceJet to ground three of its aircraft engines by August 16 and return them to the lessors - Sunbird France 02 SAS and Team France 01 SAS. The lessors had filed a case in December last year, claiming dues of more than $20 million for the engines.

SpiceJet had challenged the August 14 order of the single-bench judge. However, the high court division bench of Justices Rajiv Shakdher and Amit Bansal refused to interfere, upholding the initial order.

"The airline had violated an interim payment agreement with the lessors and had failed to honor its financial commitments, causing financial harm to both parties," the high court said.

The bench ruled, "The record reveals SpiceJet is in default and past and current outstanding dues remain unpaid. At the risk of repetition, it must be stressed that SpiceJet has violated an agreed interim arrangement for payment of dues, which included a term that, upon breach, would ground the engines that Team France and Sunbird France could then repossess."

"The fact that the financial condition of SpiceJet is weak is evident from its conduct and the stand taken on its behalf in court that it is attempting to infuse funds through loans and/or equity. If the position in which SpiceJet is at this juncture, Team France and Sunbird France could well end up both without its engines or the monies due under the engine lease agreements," the high court order added.

The high court further noted that SpiceJet continued to use the engines despite defaulting on payments, raising concerns about the financial damage this could cause the lessors.

The bench remarked that allowing the airline to retain the engines without clearing its dues would result in significant losses for the lessors, who would potentially lose both the engines and the compensation owed to them.

"The right of SpiceJet to take all defences in the suit actions would include objections concerning jurisdiction and governing law," the high court said.

Financial troubles

Reacting to the verdict, a SpiceJet spokesperson stated, "The airline is currently reviewing the court's decision"" emphasising that its flight operations remain unaffected. However, the ruling has brought to light SpiceJet's ongoing financial struggles as the airline continues to grapple with unpaid dues.

The court also recognised that SpiceJet is attempting to arrange funds through loans or equity to meet its financial obligations but warned that further delays could lead to additional losses for the lessors, the spokesperson said.

Earlier dues

The Directorate General of Civil Aviation, the apex body of the Ministry of Civil Aviation, recently placed SpiceJet under enhanced surveillance, which meant that the airline was subjected to spot checks and night-time audits by the aviation watchdog.

mid day had previously reported about the delays in payment of salaries of Spicejet pilots and the issues related to Provident Fund (PF) faced by the employees.