 "Go First")
The Delhi High Court on Tuesday said it was inclined to stay the order of the single-judge order of the same court allowing lessors to access the aircraft in possession of Go First but later deferred the hearing to July 12(Wednesday).
The court questioned whether the matter should be decided by the National Company Law Tribunal on the status of deregistration of aircraft in possession of the insolvent airline.
Under the Insolvency Bankruptcy Code, 2016(IBC), the NCLT is the adjudicating authority on all matters.
The bench also asked the lessors on the applicability of Section 14 of the IBC, which prohibits the alienation or sale of any assets owned by a company under insolvency.
Senior Advocate Rajiv Nayyar said that the airline does not own the leased aircraft(asset) as it has been given to them on lease.
Also Read
He also argued that the moratorium would not apply to them as they had terminated their leases prior to Go First being admitted to insolvency. “Go First cannot use the aircraft as the rules mandate that it cannot be used once the lease is terminated,” he said.
A moratorium period applies when a company has been admitted into insolvency and most or all legal remedies against such a company are suspended.
The bench also questioned the Director General of Civil Aviation (DGCA) on why aircraft lessors could not undertake its maintenance. DGCA said that Go First is Continuous Airworthiness Maintenance Organisation (CAMO) compliant, while the lessors are not. CAMO is a set of standards adopted and used to certify airworthiness of aircrafts, organisations maintaining aircrafts must be compliant with the standards of CAMO.
According to DGCA, the Civil Aviation Requirements (CAR) do not permit any organisation other than CAMO compliant ones to maintain the aircrafts. DGCA also said that they would not be able to permit Go First to resume operations unless they are certain that a CAMO compliant organisation is maintaining the aircraft.
Appearing for the Resolution Professional(RP), Senior Advocate Neeraj Kishan Kaul said Go First was ready to commence operations as soon as they get the nod from DGCA. “How does the business of the aircraft go on? The business goes on when the aircraft flies. Why should they(lessors) be opposing if the resumption plan is approved by the DGCA? The whole purpose of the revival of a corporate debtor is that its business is resumed. The revival plan is with DGCA. As soon as the DGCA approves, I will start flying. The resumption plan has been approved by the CoC(Company of Creditors). The CoC or lenders, which are the most credible party, they have approved. The DGCA is seized of the matter,” he said.
Kaul argued that the lessors have terminated the leases of the aircraft because of insolvency and not due to the default as they have stated. “My learned friend is wrong. The lessors had not terminated the leases despite knowing fully well that Go First was defaulting in payments since 2020, however they did so once Go First announced that it was filing for voluntary insolvency,” he said.
The single-judge bench of Delhi HC on July 5 allowed lessors of Go First to do inspection and maintenance relating to the aircraft in possession of the insolvent airline until the final disposal of the writ petition (of the lessors).
Several aircraft lessors, including Pembroke Aviation, Accipiter Investments Aircraft 2 Ltd, EOS Aviation, and SMBC Aviation, had filed a writ with the high court against DGCA and the central government. They sought directions to reclaim the planes leased to the cash-strapped airline.
The National Company Law Appellate Tribunal (NCLAT) on May 22 upheld the NCLT order of May 10 admitting Go First's plea for insolvency.
The principal Bench of the NCLT in Delhi had accepted Go First's voluntary plea to initiate the insolvency resolution process and had appointed an insolvency resolution professional to look after the airline.
