New Delhi, Sep 20 (UNI) The Supreme Court on Friday upheld the Delhi High Court’s order which directed Spicejet to ground three aircraft engines leased from French companies due to the non-payment of dues and return to them.
A Bench comprising Chief Justice of India D Y Chandrachud, Justice JB Pardiwala and Justice Manoj Misra dismissed the airline’s appeal against the High Court order and suggested that the company can independently negotiate with the lessors.
The high court had directed the airline to ground three engines and return them within 15 days after SpiceJet failed to pay outstanding lease rentals.
The Bench refused to interfere with the High Court’s September 11 order and said that SpiceJet was free to engage in negotiations with the lessors, Team France 01 SAS and Sunbird France 02 SAS, over the weekend.
“If you don’t comply, then you have to return the engines,” the bench said.
Spice Jet informed the court that it was already in discussions to settle the payments and was prepared to pay immediately.
The airline added that two engines were already grounded, and it requires more time to implement the Court order as it is arranging a stand to return the engines which would take at least a month.
The High Court had directed the company to hand over the aircraft within 15 days.
The domestic market share of SpiceJet, which continues to grapple with multiple headwinds, has dropped to 2.3% in August from 3.1% in July.
The legal battle began in December last year when the lessors filed a case against SpiceJet, demanding payment and the repossession of the leased engines.
The high court, in its September 11 order, upheld the directive to ground the engines, emphasising that the airline had breached an interim payment arrangement and triggered the contractual right of the lessors to reclaim their property. The court mandated that the engines be returned to the lessors by September 26.
The August 14 order, issued by a single-judge bench, initially required SpiceJet to ground the engines by August 16 and hand them over to the lessors. Following this, the division bench noted that SpiceJet had violated the terms of an interim payment agreement, which had stipulated that any breach would result in the grounding and repossession of the engines.
The high court said that the further use of the engines without payment would diminish their value as depreciable assets, harming the lessors’ interests.
The division bench noted the airline’s precarious financial situation, pointing to its conduct and submissions in court, where the airline acknowledged its efforts to secure funds through loans or equity infusions.
The bench said that the financial risks faced by the lessors and continued delay or non-compliance could lead to a complete loss of both the engines and the outstanding payments.
The high court stressed that preventing the lessors from exercising their contractual rights would be detrimental, given the airline’s evident financial distress and the uncertain prospect of monetary compensation.
