In a recent judgment, the High Court of Justice in the UK upheld the aircraft manufacturer’s claim that SpiceJet
did not abide by terms of contract. The court also said De Havilland is entitled to claim $ 42.9 million in liquidated damages from the airline.
Under the Indian law a separate application has to be filed in a court for execution of judgment in a civil or commercial suit.
said is appealing against the order. “ The same court allowed appeal against the order and we shall be doing the same within the timeframe provided by the court,” an airline spokesperson said today.
SpiceJet operates passenger and freight versions of Q-400 aircraft manufactured by De Havilland Aircraft of Canada Ltd. In 2017 it signed a purchase agreement for 25 Q-400 aircraft. It took delivery of five aircraft but failed to make pre-delivery payments (PDPs) for fifteen aircraft in the order.. It also did not take delivery of three of those planes ( number 6-8) resulting in a commercial dispute.
The bone of contention between the two sides relates to changes in the purchase terms. Under the amended terms scheduled delivery dates for aircraft 9- 25 were suspended. De Havilland said only delivery dates were suspended and there was no agreement to suspend the dates for pre-delivery payments in respect to those planes. SpiceJet countered by stating that liability to make those payments got automatically suspended upon suspension of delivery dates.
“It would not make business sense for the Defendant to be obliged to pay the PDPs if the deliveries were suspended,” the airline argued. SpiceJet also made a counter claim for damages against the plane maker and said it had failed to arrange financing for the aircraft.
This breach by De Havilland resulted in non payment of PDPs for three aircraft, it contended. However the court did not upheld the airline’s plea.
“ De Havilland Canada confirms that it has received judgment against SpiceJet from the High Court of Justice of England and Wales in the amount of $ 42.9 million. De Havilland Canada is pleased with the judgment. The decision confirms our position that SpiceJet did not abide by the terms of the contract in failing to accept delivery of aircraft and to make the required pre-delivery payments,” the plane manufacturer said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.