HC asks SpiceJet's KMP to file affidavit on payment schedule to engine lessor, rejects CBO's affidavit

The court rejected the affidavit filed by the Chief Business Officer (CBO) of the airline after the lessor told the court that he was not listed as a KMP

The Delhi High Court on December 21 asked a Key Managerial Person (KMP) of low-cost airline SpiceJet to file an affidavit giving an undertaking, promising to stick to the schedule of payments to Engine Lease Finance BV in two weeks.

The court rejected the affidavit filed by the Chief Business Officer (CBO) of the airline after the lessor told the court that he was not listed as a KMP. However, the contents of the affidavit by the CBO will bind SpiceJet till a fresh affidavit is filed. Furthermore, if the airline does not comply with its timelines, the lessor has the liberty to move the court.

The case is now likely to come up for hearing on January 16.

On the last date of the hearing, the HC asked a senior SpiceJet official, “who could be held accountable”, to give an undertaking, promising to stick to the schedule of payments to Engine Lease Finance BV.

Rejecting an affidavit filed by the airline’s general manager (legal), the court said that the document should be filed through a person, who could be held accountable if the company fails to meet its payment obligations.

Engine Lease Finance BV moved the court last week, 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 SpiceJet.

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.