The Supreme Court has agreed to consider low-cost airline SpiceJet‘s appeal against a Delhi Court verdict which has directed the grounding of three aircraft engines because of non-payment of dues to lessors. The SC bench headed by Chief Justice DY Chandrachud, along with Justices JB Pardiwala, and Manoj Misra, advised SpiceJet’s counsel to circulate an email for an urgent hearing. This decision was taken after a ruling by the Delhi High Court on September 11, under which the order was upheld and the airline was asked to ground the engines because of missed payments.
What was the High Court’s verdict on SpiceJet’s defaults?
A single-judge bench of the Delhi High Court ordered SpiceJet on August 14 to ground three engines by August 16 and give it back to the two lessors-Sunbird Fance 02SAS and Team France 01 SAS. The decision was challenged by SpiceJet but a division bench which included Justices Rajiv Shakdher and Amit Bansal upheld the ruling and mentioned that the airline had violated an interim payment deal. The court further stated that the airline also failed to honour its financial responsibilities and has affected the interest of both parties. The court also noticed that the airline continued using the engines despite defaulting on the payments. The bench further observed that granting permission to the airline to keep the engines without making the payments can result in huge losses for the lessors. They will lose both the things, their engines as well their money.
SpiceJet’s financial crisis
Commenting on the verdict, a spokesperson of SpiceJet responded that they are assessing the court’s decision and their flight operations stay unaffected. However, the High Court’s ruling has underlined that SpiceJet is currently dealing with a financial crisis as previous dues remain unsettled. The court is also aware that the airline is arranging the funds with the help of loans or equity for meeting its financial dues. It also warned the lessors that they may end up without the engines as well as their compensation amount.
The airline has also appealed for an extension of the payment of outstanding dues till September 30 and has agreed to a default of $2,67 million. SpiceJet is liable to make the payment of the remaining amount despite the previous dues which are already paid. The airline is also at risk of losing the engines if it is not able to pay back the dues.
(With inputs from PTI)