Delhi HC directs Spicejet to ground three engines, handover possession to lessors in 2 weeks

New Delhi: The Delhi High Court on Wednesday directed low-cost airline Spicejet to ground three engines by Friday and handover them to its lessors within 15 days.

The high court directed the airline to offer prior inspection of the engines to lessors, Team France 01 SAS and Sunbird France 02 SAS, through their authorised representative at the Delhi airport within seven days.

"... this court has no option but to direct the defendant (Spicejet) to ground the three engines with effect from August 16, 2024. The defendant will take steps to ensure that the engines are redelivered to plaintiff within fifteen days from today," Justice Manmeet Pritam Singh Arora said in the order.

The court passed the order on pleas by the lessors seeking a direction to Spicejet to handover possession of three engines on termination of the lease agreements.

It was stated in the pleas that following the termination, the plaintiffs had directed the airline to ground and re-deliver the engines and pay all outstanding dues, however, the carrier failed to do so.

“It is however clarified that the defendant will remain liable for making payments, which it undertook in order dated May 29, 2024 towards the admitted outstanding of USD 4.8 million and towards the weekly payments arising on account of use of the Engines under the aegis of this court.

“The return of the engines does not absolve the defendant from its liability for the payments which have admittedly fallen due and to that extent the plaintiff is entitled to recover the said amount from the defendant through execution of the order dated May 29, 2024,” the court said.

The high court said in view of the unequivocal admissions of the airline qua its liability towards the lessors, the plaintiffs have made out more than a prima facie case for grant of reliefs sought in the interim applications for restraining the defendant from operating the three engines and issuing direction to it to remove the engines from the aircrafts and ground the same for it to be redelivered to the plaintiff.

“This court also finds favour in the submission of the plaintiff that it is suffering irreparable loss due to continuing use of engines by the defendant as engines are depreciating assets which suffer wear and tear,” it said.

The court added that Spicejet is a “defaulter and has no legal and contractual right to continue the use of the engines”.

“The inability of the defendant to pay the admitted outstanding dues is writ large on the face of the record and in fact permitting the defendant to continue the use of the engines without payment would only cause financial distress to the plaintiff and therefore, the balance of convenience is against the defendant and in favour of the plaintiff,” it said.

The court directed the airline to take all precautions and compliances for ensuring that the engines are redelivered to the plaintiffs in accordance with terms of lease agreements executed between the parties.

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

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

He said while the defendant admits that there has been default, however, it was making its best endeavour to regularise these defaults and sought extension of time until September 30 to clear the outstanding payments.

He further said if a direction is issued for grounding the three engines, it will cause grave loss to the airline which has a fleet of 21 aircrafts.

The lawyer said two engines are required for each plane and if three engines are grounded the defendant will have to ground two aircrafts and this will cause grave inconvenience to the flyers since the flights have been booked weeks in advance.