Delhi HC permits engine inspection amidst SpiceJet-lessor dispute

New Delhi : The Delhi High Court on Tuesday granted permission to Engine Lease Finance BV, a lessor to SpiceJet, to conduct inspections on an engine leased to the airline. The low-cost airline has been directed to maintain status quo regarding the engines, with exceptions allowed only for purposes like refurbishing.

This directive comes in response to allegations by the lessor, accusing SpiceJet of cannibalising parts of the leased engine. It informed the court that despite SpiceJet committing to grounding the engine on January 15, the airline continued its use.

Counsel for SpiceJet assured the court that the airline would ground the engine promptly and submit a comprehensive response to address all allegations raised by the lessor.

Earlier, the court was informed that Engine Lease Finance Corporation Aviation Services Ltd and cash-strapped SpiceJet airline have arrived at an interim settlement.

During the hearing, both parties’ legal representatives had informed the court that settlement terms have been agreed and consequently, both legal teams requested an adjournment. The court had granted the adjournment, scheduling the matter to be heard on February 8.

As part of the settlement, SpiceJet is required to make a payment of over $2 million to Engine Lease Finance BV by January. Additionally, SpiceJet has committed to returning the disputed engine by January 25.

However, Engine Lease Finance BV retains the right to maintain the termination and pursue legal action if SpiceJet fails to fulfil these obligations.

On September 27, Engine Lease BV had taken the matter to the Delhi High Court, seeking the return of the lone remaining engine. The lessor had initially leased nine engines to the carrier, and according to the terms of the lease agreement, eight engines had been returned as the agreement was terminated.

During the previous hearing, senior advocate Rajshekar Rao and attorney Anandh Venkatramani, representing Engine Lease, had requested the court to prevent SpiceJet from using the engine in question. The agreement clearly states that the airline is not authorised to continue using the engine once the lease has been terminated.