Delhi High Court seeks SpiceJet's response on lessor's plea for attachment of assets

The Delhi High Court on Friday sought a response from SpiceJet Ltd as to why its assets should not be attached and sold so as to enforce the decrees of a UK court, which had directed the low-cost airline to pay $5.33 million and $8.49 million to its aircraft lessor GASL Ireland Leasing A1 in February 2022 and May 2023, respectively.

However, SpiceJet contested the attachment of assets, saying that it would not augur well for the airline, which is in the process of raising funds. The airline said it is working to settle the matter soon with GASL as it has done for other creditors.

While noting SpiceJet's senior counsel Amit Sibal's submission that a settlement proposal will be made to the Irish lessor soon, Justice Vikas Mahajan gave one week’s time to the carrier to file its reply and posted the matter for further hearing on July 19.

GASL senior counsel Jayant Mehta while seeking a direction to the airline to file an affidavit giving details of its assets submitted that Spicejet’s s status as a going concern remained doubtful and its assets should be attached and sold for the satisfaction of the UK court’s award of around Rs 135 crore.

However, senior counsel Amit Sibal, appearing for Spicejet, opposed Mehta’s submissions, saying there is no question of insolvency against the airline as it has already raised Rs 1,200 crore through equity issuance. Out of the total amount, it has already received Rs 500 crore and another Rs 700 crore is due to come soon, he said, adding the airline was also in the process of raising Rs 2,000 crore soon.

In 2017, GASL Ireland had leased its B737-800 aircraft to the airline. But SpiceJet had not made certain rental payments and owed $5.33 million to lessor in February 2022.

GASL then started proceedings against the airline relating to the alleged non-payment of rent and the alleged failure to comply with the return conditions. The lessor also sought action against SpiceJet alleging that the airline failed to meet pre-set aircraft redelivery conditions. In 2022, the aircraft was returned to the lessor allegedly in “worst condition”. The lessor then had sought unpaid lease amounts plus the cost of repairs.

In February 2022, GASL obtained summary judgment on the claim for outstanding rent of $5,334,121.25. The amount still remained unpaid, as per the lessor. Accepting the failure to comply with various other redelivery conditions by SpiceJet, the UK court in May last year also awarded over $8.49 million to GASL. The court held that there had been a breach by SpiceJet of the redelivery condition to return engines with sufficient flight hours and cycles remaining to the next engine performance restoration.