Troubles Trump SpiceJet as SC Upheld Delhi HC Order to Ground 3 Aircraft Engines

The Supreme Court bench comprising the Chief Justice of India, D Y Chandrachud, on Friday gave a blow to the debt-ridden airline company SpiceJet. The bench upheld the earlier order, which directed the company to ground three aircraft engines for defaulting on payments to lessors. The earlier order was given by the Delhi High Court on September 11. 

“We will not interfere. It’s a correct order,” said the SC bench. 

Delhi HC, in its order, asked the airline to return three engines that it has rented from Team France 01 SAS and Sunbird France 02 SAS within 15-days. 

“SpiceJet is currently in discussions with the aircraft lessor to reach an amicable settlement. It is important to note that two of the three engines in question are already grounded, and our operations remain completely normal and unaffected. We remain committed to ensuring seamless operations,” said the airline’s spokesperson. 

SpiceJet vs Problems: Problems win as SC’s Dismissal of Plea Mounts Trouble for Debt-Ridden Airline 

The SC order has come at a time when the airline is already dealing with multiple problems from financial and legal fronts.  

Recently, the company filed a preliminary placement document (PPD) with the Bombay stock exchange; in it, the airline disclosed non-payment of nearly Rs 220 crore in tax deducted at source (TDS) from employees’ salaries between April 2020 and August 2023. Additionally, the company, due to unsound financial status, has dues in customs, service tax and goods and services tax. 

“Owing to our constrained financial position, we have delayed in depositing payment of the statutory dues,” said the company in PPD. 

The airline’s financial struggles have given rise to legal battles. The company in the filing on BSE revealed that it has nearly 25 pending litigations, including defaults under aircraft lease agreements. It further disclosed that defaults in payment to aircraft lessors and other vendors have resulted in legal actions against them, including the one under the Insolvency and Bankruptcy Code, 2016. 

“India needs more airlines, not less. If SpiceJet is able to underground its fleet quickly and clear employees’ salary, PF and TDS dues apart from other payables after this cash infusion and operate more flights with better on time performance, that will be good news for passengers,” said Union aviation minister Rammohan Naidu. 

While the company’s financial and legal troubles with different stakeholders, including employees, supply chain partners, etc. have impacted its business already. Moreover, it is likely to impact its service delivery.