Delhi HC warns SpiceJet of contempt if it doesn't return engines to lessor by July 8

Set back for SpiceJet as Delhi HC warns of contempt action

A division bench of Delhi High Court on July 2 warned low cost airline SpiceJet of contempt action if it doesn't return three engines to its lessor TWC Aviation by July 8.

The order was passed in an application filed by SpiceJet seeking extension of time to till July 8 return the engines to the lessor as the airline could not find alternatives. The airline was earlier directed by the court to return them by June 16.

Senior advocate Amit Sibal, who appeared for the airline, told the court that these three engines were fitted to aircraft that are currently flying and they would have to ground the aircraft if the engines are to be returned immediately.

"These aircraft are carrying 1000 passengers a day, it will put them to great difficulty if they flights are canceled," he said. Sibal further told the court that SpiceJet will ground the aircraft and return the engines if the replacement does not arrive.

Senior advocate Dayan Krishnan, who appeared for the lessor, argued that the airline owes over Rs. 120 crore to them, and they cannot continue to monetise the engines without settling a part of their dues. He urged the court to pass an order directing SpiceJet to pay a portion of the dues before they could proceed to use the engine.

The court however asked the lessor to move an appropriate application to this effect. The bench then proceeded to issue of contempt to SpiceJet, whilst making it clear that the notice will cease operating upon SpiceJet returning the engines. The case will now come up for hearing on July 9.

On May 27, Delhi HC refused to stay an order of a single judge of the court asking low-cost airline SpiceJet to return two aircraft and three engines to its lessor TWC aviation.

SpiceJet chose to withdraw the appeal and pursue the case before the single judge. However, the court granted the airline till June 16 to return the aircraft and engines, instead of May 28 that was planned earlier.

A bench led by Justice Rajiv Shakder noted that it would be unfair to grant any order of this sort when the airline owes the lessor over Rs 120 crore. According to the court, SpiceJet does not have the right to use the aircraft and engine without paying the requisite lease amount. "They (the lessor) are not in the business of charity," the court said.

On May 15, a single judge of the Delhi High Court passed an interim order directing the airline to return two aircraft and three engine to the lessor after the airline did not comply with earlier payment deadlines. The fact that the airline had 'cannibalised' the parts of the aircraft and engine weighed heavily with the court.