Directive Follows Airline's Violation of a Payment Agreement

The Supreme Court of India recently approved a Delhi High Court order requiring SpiceJet to return three leased aircraft engines due to its failure to pay dues. The ruling, delivered on September 19, threw out the airline's appeal and encouraged direct negotiation with the engine lessors.

The legal dispute began in December 2023 when two French companies filed a lawsuit against SpiceJet. They demanded payment and the return of their three engines.

On August 14, a single-judge bench of the Delhi High Court instructed SpiceJet to ground the leased engines within two days. They acknowledged the airline’s violation of a payment agreement with the lessors, which specified that breaches would lead to the grounding and repossession of the engines.

The division bench attempted to reason with SpiceJet to ground the engines before their value diminished further. They cited the low-cost airline’s current financial instability, shown through its attempts to obtain loans and equity injections.

SpiceJet submitted an appeal to overturn the August 14 order, which was dismissed in the division bench’s latest ruling. They pointed out the airline's repeated defaults and accumulating unpaid dues exceeding $20 million over two years. SpiceJet was ordered to return the engines to the lessors by September 26.

Chief Justice Dhananjaya Y Chandrachud, along with Justices JB Pardiwala and Manoj Misra, granted SpiceJet the chance to negotiate with the lessors in the coming days. SpiceJet confirmed that two of the three engines were already grounded, but stated that they may not be able to organize their return by the mandated deadline.

“SpiceJet is currently in discussions with the aircraft lessor to reach an amicable settlement,” the airline commented. “It is important to note that two of the three engines in question are already grounded, and our operations remain completely normal and unaffected. We remain committed to ensuring seamless operations.”

FMI: www.spicejet.com