Delhi HC allows lessor to inspect engine leased to SpiceJet

Delhi HC permits engine lessor to inspect engine

The Delhi High Court on January 16 permitted Engine Lease Finance BV, a lessor to SpiceJet, to inspect an engine it had leased to the low-cost airline.

The inspection is to be carried out once at the time of grounding of the engine and once at the time of its re-delivery. The court further asked SpiceJet to maintain status quo with respect to the engines after grounding them, excepting for purposes such as refurbishing the engine among others.

The direction was passed after the lessor alleged that SpiceJet was 'cannibalising' part of their engine. The lessor also told the court that even though the low-cost airline undertook to ground the engine on January 15, it continued using the same. To substantiate their claim, the airline's lawyers submitted data from Flightradar24, an app that tracks aircraft, to prove the same.

SpiceJet, however, told the court that it had questions on the sanctity of data provided by the lessor. Senior advocate Sandeep Sethi, who appeared for the airline, also told the court that it would ground the engine by today and file a response to all the allegations made by the lessor.  The case is now likely to come up for hearing in the last week of January.

Engine Lease Finance Corporation was represented by senior advocate Rajshekar Rao and lawyer Anandh Venkatramani, they were briefed by law firm Tuli & Co, with partner Saket Satapathy.

Engine Lease Finance BV moved the court in December, alleging that the low-cost airline had failed to make payments as agreed.

The lessor had alleged that SpiceJet only paid a part of the money and was yet to make complete payments as was agreed in October. The court said the airline couldn’t go back on its words  and asked SpiceJet to file an undertaking to pay.

In October, the lessor and SpiceJet arrived at an interim settlement. The engine lessor agreed not to pursue the stay application against the airline.

According to the terms of the settlement, SpiceJet must pay over $2 million to Engine Lease Finance by January. SpiceJet also agreed to return an engine, which is the bone of contention by January 25. The engine lessor is free to approach the court if SpiceJet does not comply with these undertakings.

On September 27, Engine Lease Finance informed the court that the firm terminated its lease with SpiceJet and the airline had returned eight of its nine engines. As per the agreement, the airline cannot continue using the engine once the lease is terminated. The lessor sought the court's order to restrain SpiceJet from using its engine.