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Business News/ Companies / News/  Delhi HC grants SpiceJet three weeks more to return leased assets to TWC Aviation
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Delhi HC grants SpiceJet three weeks more to return leased assets to TWC Aviation

On 15 May, a single bench high court ordered SpiceJet to return two leased Boeing aircraft and their engines to lessor TWC Aviation by 28 May over unpaid dues

The division bench allowed SpiceJet an extension on the condition that it would withdraw its challenge to the single bench order. Photographer: Abhijit Bhatlekar/Bloomberg NewsPremium
The division bench allowed SpiceJet an extension on the condition that it would withdraw its challenge to the single bench order. Photographer: Abhijit Bhatlekar/Bloomberg News

New Delhi: The Delhi high court division bench on Monday granted an additional three weeks to troubled airline SpiceJet to return two Boeing aircraft, three engines, and technical records to its lessor, TWC Aviation Capital Ltd.

SpiceJet now needs to return these assets by 17 June.

The division, however, rejected SpiceJet's plea challenging the single bench order to return the assets, noting that the airline owes a significant amount of dues to lessors and was prima facie found to have used the assets inappropriately, especially by utilizing the lessor's engines in other aircraft, which violates regulations. 

"They (the lessor) are not in the business of charity," the court said.

The division bench allowed SpiceJet an extension on the condition that it would withdraw its challenge to the single bench order and proceed to argue in front of the single bench on challenging the maintainability of the lessor's suit.

SpiceJet pleaded that these leased engines were in use in operational flights with advanced bookings from passengers. It argued that the airline needed some time to replace these leased engines so it would not impact its flight operations.

Amit Sibal, representing SpiceJet, said the aircraft's engines are crucial for the functioning of the airline, constituting approximately 7.5% of its total fleet of 27 aircraft. He highlighted SpiceJet's track record of settling with around 15 lessors and creditors, including Credit Suisse and Celestial Aviation.

Sibal also proposed to pay $50,000 per week to TWC Aviation as part of the settlement to clear the complete dues of $14 million.

What the single bench said

On 15 May, a single bench high court ordered SpiceJet to return two leased Boeing aircraft and their engines to lessor TWC Aviation by 28 May over unpaid dues. The court noted that SpiceJet had damaged TWC’s assets by separating the engines from the planes and using them in other aircraft. 

Referring to an inspection report provided by TWC Aviation, the court underlined the need to prevent further damage to the assets.

TWC Aviation Capital leased two Boeing aircraft and three engines to SpiceJet for 12 months in 2019, but SpiceJet defaulted on its $180,000 monthly rent. 

Agreements between the two companies were amended during covid-19, but SpiceJet allegedly violated the terms. TWC Aviation Capital then filed a lawsuit in the High Court of Justice in England and Wales to reclaim its assets.

In March, the High Court of England and Wales issued an interim injunction against SpiceJet, prohibiting it from using TWC's engines on other aircraft due to concerns about inappropriate use and potential damage. 

SpiceJet challenged the injunction, but the court ruled in TWC’s favor, ordering the airline to return the leased aircraft and engines.

The airline is facing several lawsuits from lessors over unpaid dues in the Delhi high court and the National Company Law Tribunal. 

On 3 May, the high court ordered the airline to pay $1.58 million to its engine lessors, Team France and Sunbird France, by 22 May, warning that the aircraft with the leased engines would be grounded if the dues were not paid.

Also read: For SpiceJet to stay afloat, some crew will have to deplane

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ABOUT THE AUTHOR
Krishna Yadav
Krishna, a lawyer turned journalist, is a key member of Mint's corporate team. He covers major legal battles in Delhi's courtrooms, with a focus on finance, markets, and policy. Additionally, he crafts easy-to-understand explainers for complex stories and holds a PG Diploma from the renowned Asian College of Journalism.
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Published: 27 May 2024, 02:59 PM IST
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