Supreme Court to consider SpiceJet’s appeal against Delhi HC order grounding 3 aircraft engines for payment defaults

The Supreme Court on September 12 said it will consider listing low-cost airline SpiceJet’s plea challenging a Delhi High Court verdict grounding three aircraft engines for defaulting on payments to lessors. 

A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra asked the counsel for the airline to send an e-mail seeking an urgent hearing of its plea against the high court verdict of September 11.

A division bench of the Delhi High Court on September 11 ruled that the carrier had violated an agreed interim arrangement for payment of dues and upheld an order of a single-judge bench asking the low-cost airline to ground the three engines for defaulting on the payments. 

On August 14, the single-judge bench directed SpiceJet to ground three engines by August 16 and hand them over to their lessors -- Team France 01 SAS and Sunbird France 02 SAS. SpiceJet had challenged the August 14 order. 

“The appeals are emblematic of the adage that fools create assets and wise men use them. The use of a lessor’s assets without recompense, on agreed terms, by the lessee often leads to consequences which disrupt the interests of both sides,” the High Court bench of Justices Rajiv Shakdher and Amit Bansal said. 

After the HC verdict, a SpiceJet spokesperson said, “Our operations continue as normal and remain completely unaffected. We are currently reviewing the court order.” 

The HC said the record revealed that SpiceJet was in default, and past and current outstanding dues remain unpaid. “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. Therefore, compensation in terms of money does not seem probable from the point of view of Team France and Sunbird France,” it said. 

It said if the lessors are prevented from exercising their contractual rights at this stage, they could possibly lose both their assets, the engines and the money. 

The single judge had passed the order on pleas moved by the lessors seeking a direction to SpiceJet to hand over the possession of the three engines on the termination of the lease agreements. 

The lessors in their pleas claimed that following the termination, the plaintiffs had directed the airline to ground and re-deliver the engines and pay all outstanding dues, but the carrier had failed to do so. 

“It is, however, clarified that the defendant will remain liable for making payments, which it undertook in an order dated May 29, 2024, towards the admitted outstanding of $4.8 million and towards the weekly payments arising on account of the use of the engines under the aegis of this court. The return of the engines does not absolve the defendant from its liability,” the court had said. 

It had said that SpiceJet is a “defaulter and has no legal and contractual right to continue the use of the engines”. 

In its response, the airline’s counsel had submitted that after filing the suit, the defendant made a payment of $7.18 million between December 14, 2023 and May 24, 2024. 

The counsel had said after the settlement terms were recorded before the court in May, the airline made a payment of $1.48 million and as of August 12, there was an admitted default to the extent of $2.67 million towards the outstanding amount. 

The counsel had said while the defendant admits that there has been a default, it is making its best endeavour to regularise these defaults and sought an extension of time until September 30 to clear the dues. 

(With PTI inputs)