Delhi High Court Orders SpiceJet to Return Leased Engines to French Firms After Payment Defaults, Rejects Jurisdiction Challenge

On September 11, 2024, the Delhi High Court, in FAO(OS) (COMM) 181/2024 & 182/2024, directed SpiceJet Limited to ground and return three aircraft engines leased from Team France 01 SAS and Sunbird France 02 SAS after the airline defaulted on payments under an interim settlement. The court rejected SpiceJet's jurisdictional challenge and allowed the French companies to repossess the engines while holding SpiceJet liable for unpaid dues exceeding USD 4.8 million.

The dispute stemmed from two lease agreements executed between SpiceJet and the French companies concerning three aircraft engines, with the agreements signed on December 14, 2018, and March 29, 2018. Following ongoing financial difficulties, Team France 01 SAS and Sunbird France 02 SAS initiated lawsuits in December 2023, seeking repossession of the engines due to non-payment of lease dues by SpiceJet.

Despite a court-approved settlement on May 29, 2024, which allowed SpiceJet to continue using the engines subject to a structured payment schedule, the airline consistently defaulted. The French companies moved the court again in July 2024, citing further defaults and seeking immediate repossession of the engines.

Jurisdiction: SpiceJet contended that the Delhi High Court lacked jurisdiction, as the lease agreements designated English courts as the exclusive forum for dispute resolution. The airline argued that the proceedings should be governed by English law.

Non-Payment of Dues: The central issue was SpiceJet's failure to make payments as agreed in the May 2024 settlement, which justified the French firms’ demand for repossession of the engines.

Pre-Litigation Mediation and Stamping: SpiceJet further argued that the agreements were not properly stamped under Indian law and that the French companies had not complied with the mandatory pre-litigation mediation under the Commercial Courts Act, 2015.

The court rejected SpiceJet’s jurisdictional argument, stating that since the engines were physically located in India, the Delhi High Court had the authority to order repossession and enforce the payment schedule. The court clarified that while the lease agreements included provisions for English jurisdiction, the repossession and export of engines could be adjudicated under Indian law where the assets were located.

SpiceJet was found in breach of the payment terms set forth in May 2024, with unpaid dues exceeding USD 1.3 million as of July 2024. As a result, the court ordered SpiceJet to return the engines to the French companies within 15 days, while remaining liable for all outstanding payments under the lease.

This judgment reaffirms the authority of Indian courts to exercise jurisdiction over assets located within India, even when lease agreements include foreign jurisdiction clauses. SpiceJet faces the immediate task of complying with the court order to return the engines while remaining liable for dues under the court-approved settlement. The decision sets an important precedent for the enforceability of cross-border leases and the jurisdictional authority of Indian courts in similar cases.

Date of Decision: September 11, 2024.

SpiceJet Limited vs. Team France 01 SAS & Sunbird France 02 SAS