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Informist, Friday, Sep 20, 2024

 

--SC OKs order asking SpiceJet to ground, return 3 engines to lessors

 

NEW DELHI – The Supreme Court today upheld a Delhi High Court order asking the airline to ground three of its engines and return these to lessors, Team France 01 SAS and Sunbird France 02 SAS, for non-payment of dues. The Bench led by Chief Justice of India D.Y. Chandrachud said the apex court won't interfere with the high court's order.

 

At the hearing, the airline said it was ready to pay the remaining amount even today. The apex court, while refusing to interfere with the order to ground the leased engines, said the airline and the lessors can negotiate independently and inform the court accordingly.

 

In May, a single-judge bench of the Delhi high court had passed a consent order, saying that if SpiceJet did not pay the amount, its engines were liable to be grounded and returned to the lessors, the top court reiterated today. 

 

Last week, the division bench of the Delhi High Court had refused to interfere with the single-judge bench order. "We are not inclined to interfere with the order. The appeals are not entertained. I would urge your clients (SpiceJet) to settle this," the Bench of Justices Rajiv Shakdher and Amit Bansal had said.  

 

On May 29, the single-judge bench of the high court had asked SpiceJet to pay $4.8 mln to the lessors as an interim arrangement to continue using the three leased engines. The airline was required to pay this amount in four instalments, the court had said. It challenged the grounding and returning of the engines as it would impact operations.

 

SpiceJet had said in the high court that the order would effectively lead to grounding of two of their planes. "We only have a fleet of 21 aircraft. The engines are to be grounded as of today. Each aircraft uses two engines so the order will effectively lead to grounding of two aircraft. It will cause public inconvenience. There are flights booked...," Advocate Amit Sibal, appearing for the airline, had said.

 

In December last year, the lessors had filed two suits seeking a permanent injunction against SpiceJet and its directors and employees from using the said engines any further. The lessors had also sought directions from the court to SpiceJet to hand over the engines to them and compensate them for the cost associated with their repossession as well as pay them the outstanding lease charges.

 

According to the single-judge order, the airline would have to make weekly payments of $160,000 to the lessors from Jun 8 to Sep 30. If the airline missed any payment, it would be liable to ground its three engines and return them to the lessors within 15 calendar days, the court had said. After making this payment, the court had directed the parties to discuss the payment plan for the outstanding $3.6 mln. The above interim arrangement will remain in place, and subject to its compliance, the airline will continue to use the engines, the single-judge bench had said.

 

On Jul 31, the lessors informed the court that SpiceJet had failed to comply with the order and sought an injunction against the airline from operating the engines. SpiceJet accepted the default and said that the payment would be made till Aug 8. However, the airline did not make the payment. Consequently, the single-judge ordered grounding of the three engines and asked SpiceJet to return them to the lessors. The airline had then moved the division bench against this order. 

 

At 1317 IST, shares of SpiceJet were down 1.4% at 67.45 rupees on the BSE.  End

 

US$1 = 83.52 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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