Delhi HC gives SpiceJet February 15 deadline to pay lessors $4 million

Spicejet asked to pay $ 4 million

In a set back for the low cost airline SpiceJet, the Delhi High Court on January 29 directed it to pay $4 million against its dues to two engine lessors. The HC has warned the airline that in the event it does not pay the money, it will be constrained to pass orders in the application seeking the engine's grounding.

During the course of the hearing, the High Court was informed by the lessor that SpiceJet had made an offer to settle the dispute, however the offer was not aggregable to them.  The lessors also told the court that they now wish to pursue litigation against SpiceJet. The case will now come up for hearing on February 21, 2024.

In December 2023, Delhi High Court had directed SpiceJet to pay $450,000 to the lessors in two weeks. While the airline had paid the amount, the lessors pushed for a further payment considering the amount outstanding.

The lessors, Team France 01 SAS and Sunbird France 02 SAS, moved a suit alleging that the airline has not paid them a sum of $12.9 million for over two years. They furthermore asked the court to restrain the airline from using their three engines despite the termination of the lease.

The lessors were represented by senior advocate Rajshekar Rao and lawyer Anandh Venkatramani, who were briefed by Tuli & Co's partner Saket Satapathy. Senior advocate Sandeep Sethi appeared for SpiceJet.

SpiceJet and lessors:

A total of five aircraft lessors filed five insolvency pleas in the National Company Law Tribunal (NCLT) against SpiceJet in 2023 for the non-payment of dues. Aircastle Ireland Ltd, Willis Lease Corporation, Wilmington, and Celestial filed petitions asking the NCLT to admit SpiceJet to the insolvency process to enable them to recover their dues.

Another engine lessor, Engine Lease Finance BV, moved a similar petition at the HC; the same is pending and expected to come up for hearing in February 2024.

SpiceJet raises funds:

In an internal note to senior staff on January 29, the airline said it now has a substantial bank balance of more than Rs 900 crore, including Rs 160 crore received as an instalment under the government's Emergency Credit Line Guarantee Scheme (ECLGS).

The carrier, which had been facing multiple headwinds in recent months, has so far received around Rs 1,000 crore under the ECLGS.

The latest instalment came recently after its Chairman and Managing Director Ajay Singh infused funds into the airline, according to an official in the know.