TWC Aviation Capital Limited v SpiceJet Limited

On the return date of an interim injunction, the court must assess the balance of convenience by reference to the parties’ legal rights and the practical risk of uncompensable harm. Where lease defaults are effectively undisputed, termination notices are unchallenged, and continued use of leased assets is highly probably unlawful, serious operational consequences for the defaulting party do not justify permitting that use. Proposed undertakings may be inadequate where they are vague, permit continuing breaches, or have already been disregarded. The court is not a bankruptcy court and will not grant a moratorium or breathing space merely to enable a debtor to restructure.

TWC Aviation Capital Limited leased two aircraft and four engines to SpiceJet Limited. Following revised payment arrangements, SpiceJet failed to make the agreed payments. TWC served termination notices and sought interim relief concerning the use, preservation and return of the aircraft and engines.

An interim prohibitory injunction had been granted on 14 March 2024 without SpiceJet being heard. On the return date, SpiceJet proposed undertakings which would have permitted continued use of TWC’s engines on other aircraft and limited further removal of aircraft parts. The central issue was where the balance of convenience lay, including whether continued use and cannibalisation would expose TWC to uncompensable loss.

1. Interim injunction continued. The court was satisfied that SpiceJet’s defaults constituted events of default, that the termination notices had not been meaningfully challenged, and that the leases would in any event end on 31 March because continuing defaults prevented reliance on an evergreen extension provision.
2. Balance of convenience. Continued use of the engines on other aircraft and further cannibalisation would cause TWC real and potentially uncompensable harm. The risks included the use of engines with different thrust ratings, delay in restoring and redeploying the aircraft and engines, and concerns about SpiceJet’s ability to maintain and repair them. SpiceJet’s financial condition meant that any resulting loss could not readily be compensated.
3. Undertakings inadequate. The proposed undertakings still permitted use of the engines and contained a vague exception for business efficacy. Their broad wording would be difficult to enforce through committal proceedings. Their value was further undermined by SpiceJet’s wholesale breach of the earlier order.
4. Operational hardship insufficient. The court recognised that preventing use of the engines would materially affect SpiceJet’s operations, potentially removing about 15 per cent of its fleet. However, there was no colourable basis for lawful continued use. The court would not sanction highly probably unlawful use merely because cessation would have serious consequences.
5. Final interim relief. The interim injunction preventing use of the engines was continued. Delivery up of the leased engines and aircraft was ordered, subject to an order preventing export from India for eight weeks, preserving some reversibility if SpiceJet could develop an arguable response.

First-instance ruling on the return date of an interim injunction granted on 14 March 2024.