Delhi High Court pulls up SpiceJet for repeat failures to clear dues of lessors, seeks directors’ undertaking

The Delhi High Court on August 8 pulled up SpiceJet for repetitive failures in paying the remaining amount to its lessors. The court told the airline that it should ground the engines and not continue to enjoy their benefits if it is unable to pay the money to the lessors.  

The High Court also asked SpiceJet if it is willing to submit a personal undertaking from its directors that if the airline is unable to pay the remaining amount to its engine lessors -- Team France 01 SAS and Sunbird France 02 SAS – the executives will pay the money from their own pockets. 

The court also asked the lessors to reply if they would accept the directors’ undertaking or continue to seek grounding of engines for non-payment of dues. 

In the last four hearings, SpiceJet had promised to pay, but did not give the remaining amount to the lessors, said the court. 

When SpiceJet’s lawyer sought an extension of payment of the remaining amount, the court said it would allow it only if they gave a personal undertaking of the directors’ liability to pay the amount. “This company (SpiceJet) obviously does not have money,” the court remarked. 

The airline argued that grounding the engines would severely impact its revenue and hinder its ongoing Rs 3,000 crore fundraising efforts. 

On May 29, the High Court had asked SpiceJet to pay $4.8 million to the engine lessors as an interim arrangement to continue using their three leased engines.  

The airline will pay the amount in four instalments to the lessors, the court had said. In addition, the airline would make weekly payments of $160,000 to the lessors from June 8 to September 30, the court had added. If the airline misses any of the payments, it will be liable to ground its three engines and return these within 15 calendar days, the court had said.  

After this payment, the parties will discuss the remaining plan of payment related to the outstanding $3.6 million, it had said. The above interim arrangement will remain in place, and subject to its compliance, the airline will continue to use the engines, said the court. 

In December, the lessors had filed two suits seeking a decree of permanent injunction restraining SpiceJet and its directors and employees from utilising the said engines any further. The lessors had also sought directions from the court to SpiceJet to hand over these engines to them and compensate them for the costs associated with their re-possession and also pay them the outstanding lease charges. 

On July 31, the lessors said SpiceJet had failed to comply with the statements given to the court. They sought an injunction against the airline from operating the engines. SpiceJet accepted the default and said that the payment would be made till August 8. However, the airline did not make the payment.

The court on August 8 also sought details of the assets from the airline along with the personal undertaking of liability from its directors.   

At 14:00 pm, shares of SpiceJet were up 3.93% at Rs 59.18 on the BSE.