SpiceJet Faces Turbulence As 3 Lessors Move NCLT Alleging Default Worth Rs 77 Crore

Budget airline SpiceJet finds itself in the midst of turbulence yet again as three of its lessors, AWAS 36698 Ireland, AWAS 36694 Ireland, and AWAS 36695 Ireland, have taken the legal route by initiating insolvency proceedings against the carrier. The move comes in response to alleged defaulting on rental dues amounting to a substantial Rs 77 crore. The National Company Law Tribunal (NCLT) has taken cognizance of the matter, issuing a notice to SpiceJet and setting a two-week deadline for a response. The hearing has been adjourned to May 30.

Representing the lessors, senior advocate Pramod Nair underscored the legal basis of the plea, citing a judgment from the High Court of Justice in London and the contractual obligations between the parties. However, senior advocate Krishnendu Dutta, representing SpiceJet, raised objections to the notice. Dutta argued that such legal actions could impede the airline's efforts to secure funds for settling its creditors, including lessors. He further contested the admissibility of the plea, highlighting its reliance on a foreign court's judgment rather than the contractual terms. Dutta also emphasized that the lessors had pursued similar claims in another court and failed to provide evidence of default by SpiceJet.

This development adds to the series of insolvency pleas SpiceJet has been grappling with in the NCLT, indicative of the carrier's ongoing financial challenges. Past petitioners include Wilmington Trust SP Services (Dublin), Willis Lease Finance, Celestial Aviation, Aircastle, and Alterna Aircraft. While the NCLT dismissed the pleas of Willis Lease Finance and Wilmington Trust SP, SpiceJet managed to resolve its dispute with Celestial Aviation. However, the cases filed by Aircastle and Alterna Aircraft remain pending.

In a separate legal battle, former SpiceJet promoter Kalanithi Maran and KAL Airways recently approached the Delhi High Court, seeking contempt proceedings against the airline and its chairman, Ajay Singh. This move stems from SpiceJet's alleged non-compliance with previous court orders related to the enforcement of an arbitral award totalling Rs 579 crore, plus accrued interest, awarded to Maran in 2018. The court has issued a notice to SpiceJet in response to Maran's plea and scheduled the next hearing for April 25.

Maran has accused SpiceJet of flouting multiple court directives, including a specific order dated February 5, which mandated the airline to pay Rs 50 crore to the former promoter within six weeks.

These legal entanglements paint a challenging picture for SpiceJet as it navigates through financial hurdles and strives to maintain operational stability. With mounting pressure from creditors and legal adversaries, the airline faces a critical juncture in its efforts to regain financial footing and ensure uninterrupted services for its passengers.