Legal troubles seem to be deepening for SpiceJet as two aircraft leasing companies GASL Ireland and VS MSN secure a $15 million judgment against them in the London High Court. Besides there are at least, three more cases lodged in the commercial courts of London against SpiceJet which are currently in different stages including a claim filed by a Turkish company.
The development comes in the wake of Wilmington Trust SP Services (Dublin) filing insolvency plea in the National Company Law Tribunal (NCLT) against SpiceJet. Wilmington Trust had also got a summary judgment in the high court in London in July 2021.
It is likely that these two companies who had filed separate cases could also approach NCLT seeking SpiceJet’s insolvency. In fact, the proceedings in the commercial court in London reveal that VS MSN could have got default judgment but instead sought a summary judgment to facilitate taking legal steps in India against the airline.
The case with GASL Ireland pertains to the lease of a Boeing 737-800 aircraft by SpiceJet in May 2017. In February 2022, GASL obtained summary judgment for outstanding rent in the sum of $5,334,121.25 which remains unpaid, but continued to pursue SpiceJet claiming non-compliance with aircraft Redelivery Conditions.
After non-payment of rent by SpiceJet, GASL requested that the aircraft be redelivered in the Republic of Ireland. Instead, SpiceJet made it available to GASL at Bengaluru from where it was flown by GASL to Lithuania for maintenance and inspections. Since there was a dispute between both the sides on whether the aircraft met the Redelivery Conditions, they sent their experts to prepare a report.
In Lithuania, the aircraft was inspected for GASL by Peter Bull, an experienced aircraft maintenance engineer and by a representative of SpiceJet. Bull took over 1,800 pictures and produced a voluminous report on the condition of the aircraft, which was produced in court. The condition of the cabin and flight deck was described by Bull as one of the worst I have seen in relation to an ‘in service’ aircraft which had been presented for redelivery. Bull also gave evidence that the aircraft was not repainted as required by the Redelivery Condition.
SpiceJet, on the other hand, did not submit any report from its expert who inspected the aircraft at Lithuania. This was pointed out by GASL’s barrister that the reason SpiceJet did not submit their expert’s report was because it would not have supported the airline’s case that the aircraft met Redelivery Conditions. The court accepted Bull’s evidence in full and entered judgment against SpiceJet in the amount of $8,490,312.39.
In the second case, SpiceJet entered into an agreement with VS MSN to lease a Boeing 737-700 for 96 months in April 2018. In the backdrop of Covid-19, there were payment defaults and in November 2020, the parties entered into a rent deferral agreement. A total of $1,657,376 was waived under the agreement and further arrangements were agreed which laid down payments in monthly instalments during 2021.
But continued non-payment by SpiceJet left over $4 million outstanding by September 2022. Accordingly, VSN approached the high court in London seeking payment of the outstanding dues. At the beginning, SpiceJet failed to even acknowledge service.
During the court proceedings, SpiceJet made several attempts to delay the court's timetable. In one instance, the airline's legal team withdrew from the case, citing non-payment of fees. Subsequently, SpiceJet requested additional time, stating that they were in the process of hiring a new legal team. However, the court was unimpressed with these excuses and insisted that the proceedings must continue. As a result, a summary judgment was entered against the airline.
GASL Ireland and VS MSN are expected to seek enforcement of the UK court's judgment through the National Company Law Tribunal (NCLT) in India.
With the mounting litigation both in the United Kingdom and India, all eyes are now on SpiceJet as to what arguments SpiceJet will present to defend itself in these legal battles.