When SpiceJet’s lawyer requested more time to pay the remaining amount, the court responded that an extension would be granted only if the directors personally guaranteed the payment. The court noted, “It’s clear that this company (SpiceJet) lacks the funds.”
NEW DELHI: The Delhi High Court slams the company’s repeated failures to pay outstanding dues to its aircraft engine lessors. The court’s message is clear – if SpiceJet cannot fulfill its financial obligations, it should ground its planes and cease operations rather than continue to enjoy the benefits without paying.
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The SpiceJet’s inability to clear the remaining amount owed to two lessors, Team France 01 SAS and Sunbird France 02 SAS. During the August 8th hearing, the High Court expressed its displeasure, stating that the airline “obviously does not have money” after it had promised to pay the dues in the last four hearings but failed to do so.
In a bid to compel SpiceJet to take responsibility, the court has now asked the airline if its directors are willing to submit a personal undertaking to pay the remaining amount from their own pockets if the company is unable to do so. The lessors have also been asked to respond on whether they would accept such an undertaking or continue to seek the grounding of SpiceJet’s engines for non-payment.
When SpiceJet’s lawyer requested more time to pay the remaining amount, the court responded that an extension would be granted only if the directors personally guaranteed the payment. The court noted, “It’s clear that this company (SpiceJet) lacks the funds.”
The airline argued that grounding the engines would significantly harm its revenue and disrupt its ongoing efforts to raise Rs 3,000 crore.
On May 29, the High Court ordered SpiceJet to pay $4.8 million to the engine lessors as an interim measure to continue using their three leased engines. The court specified that the airline would pay this amount in four installments and, additionally, make weekly payments of $160,000 to the lessors from June 8 to September 30.
If SpiceJet failed to make any of these payments, it would be required to ground the three engines and return them within 15 calendar days.
After the interim payments, the parties would discuss the remaining payment plan for the outstanding $3.6 million. The court stated that the interim arrangement would remain effective, allowing SpiceJet to continue using the engines as long as it complied.
In December, the lessors filed two suits seeking a permanent injunction to prevent SpiceJet, its directors, and employees from further using the engines. They also requested that the court order SpiceJet to return the engines and compensate them for the costs of repossession and unpaid lease charges.
On July 31, the lessors claimed that SpiceJet had failed to comply with the court’s orders and sought an injunction to stop the airline from operating the engines. SpiceJet acknowledged the default and promised payment by August 8, but the payment was not made.
On August 8, the court also requested details of SpiceJet’s assets and a personal liability undertaking from its directors.
At 2:00 PM, SpiceJet’s shares were up 3.93% at Rs 59.18 on the BSE.
The Delhi High Court reflects the growing exasperation with SpiceJet’s financial troubles. The airline has long been plagued by cash flow issues, delayed payments to vendors, and a precarious balance sheet. The court’s demand for personal liability from the directors underscores the seriousness of the situation and the need for SpiceJet’s leadership to find a lasting solution.
