NCLAT allows Go First lessor to conduct inspection, modifies NCLT order

Lessors told appellate tribunal each aircraft engine is valued at $15 mn and needs upkeep

The National Company Law Appellate Tribunal (NCLAT) on Friday allowed Engine Lease Finance BV to inspect four of its engines leased to insolvent airline Go First.

The NCLAT gave the airline’s resolution professional (RP) 10 days to inform the engine lessor of the date of the inspection.

The NCLAT modified an interim order by the National Company Law Tribunal (NCLT), which said lessors were not allowed to inspect Go First’s aircraft or parts.

“The Adjudicating Authority (NCLT) refusing inspection is not approved. Inspection of engines is allowed,” said the NCLAT. It said other issues raised by the parties would be addressed by the NCLT in the next hearing on September 1.

 

The lessors told the NCLAT each engine was valued at $15 million and needs upkeep. It said the RP had written to them on June 5 on the inspection of engines but no date was specified for it.

The lessors said while the NCLT had disallowed it to inspect engines, the Delhi High Court had permitted it. The company pointed out the moratorium given to Go First should not apply to the engines but the NCLT had ruled otherwise.

Meanwhile, counsel for the RP said that since the main matter was pending before the NCLT, the NCLAT should not get involved in this.

The NCLT on July 26 said Go First could fly aircraft in its possession if those planes were still registered with the civil aviation regulator.

“It is pertinent to mention that the Directorate General of Civil Aviation (DGCA) has not deregistered the aircraft, which means that they are available to the corporate debtor (Go First in this case) to resume operations. Therefore, as long as the aircraft/engines are registered, they can be used for operating or flying to keep the corporate debtor as a going concern, however, within safeguards/safety norms prescribed by the regulators,” said the NCLT’s interim order.

The tribunal was hearing a plea filed by lessors — Bluesky 31 Leasing Company, Bluesky 19 Leasing Company, Jackson Square Aviation Ireland, SMBC Aero Engine Lease, Engine Lease Finance, and BOC Aviation (Ireland) — mainly to refrain Go First from operating the aircraft owned by them for commercial use. The tribunal said that to keep Go First alive, the aircraft leased to it must be flown.

The NCLT had also observed that allowing inspection (by lessors) would only act as an impediment to the effective discharge of the duties of the RP.