Go First insolvency: Delhi High Court allows aircraft lessors access to planes, permission to carry out maintenance work

The Delhi High Court on Wednesday allowed aircraft lessors access to the planes they had leased out to Go First Airlines and to carry out maintenance work on them. .Justice Tara Vitasta Ganju issued directions to the Director General of Civil Aviation (DGCA) to allow the lessors' representatives to inspect the planes, considering the fact that extremely valuable. The Court further restrained Go First Airlines and its Interim Resolution Professional (IRP) from removing any parts or documents from the 30 planes in question. "The petitioner lessors shall be allowed to carry out maintenance of the aircrafts at least twice a month. The respondent Go Air, its directors, employees or representatives or the Resolution Professionals or their representative as appointed by the NCLT are hereby restrained from removing, replacing, taking out any part or component etc or any relevant operational or other manual records, documentation from any of 30 aircrafts except with prior written approval of lessor of such aircraft," the Court ordered. .Justice Ganju passed the interim order while dealing with a plea filed by a bunch of lessors seeking de-registration of their aircrafts which are with Go First. Pembroke Aircraft Leasing 11, SMBC Aviation Capital, Accipiter Investments Aircraft 2, Eos Aviation 12 (Ireland), DAE SY 13 Ireland, SFV Aircraft Holdings Ire 9 DAC Limited, ACG Aircraft leasing Ireland Limited and GY Aviation Lease 1722 Co Limited were among the parties seeking relief..The matter arose after Go First moved the National Company Law Tribunal (NCLT) in Delhi to initiate the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC).It reasoned that due to faulty engines supplied by American company Pratt & Whitney (P&W), the grounding of its aircrafts increased from 31% in 2020 to more than 50% in April 2023.This cost the company a loss of over ₹10,800 crore, it was claimed.The NCLT Delhi had on May 10 admitted the plea and declared full moratorium for the company. It also directed the company's suspended board of directors to co-operate with the IRP to ensure there are no layoffs.The NCLT's decision was upheld by the National Company Law Appellate Tribunal (NCLAT) in an order pronounced on May 22..The lessors then moved the High Court to de-register the leased aircrafts. They pleaded that they had filed applications for de-registration of aircrafts, but the same were rejected by the Director General of Civil Aviation (DGCA).It was argued that the IBC did not have relevant provisions for dealing with cases pertaining to de-registration, and hence even bankruptcy tribunals were not competent to hear their pleas.Their main argument was that they had terminated their lease agreement with the airline prior to its application for insolvency. The lessors claimed that the termination had been initiated because there had been multiple defaults by Go First."The prayer is not asking for possession, but for de-registration. These applications have no concern with IBC. These are matters of international treaties. The aircrafts are expensive and Go First has not challenged the termination of the agreement," the lessors argued..Senior Advocate Harish Salve appeared for the Interim Resolution Professional (IRP) in one of the matters and argued that the issue of de-registration of aircrafts cannot be decided by a writ court.He said that if the NCLT has refused the lessors’ plea, then the DGCA cannot be issued a writ overriding that order. This is a parallel proceeding, he added.“Look at the consequence if the aircrafts are returned. The airline is dead, thousands of people would be without jobs. From people who scrub the floors to the pilots everyone will lose their jobs. We have over 7000 employees, my client (IRP) must take charge of all this. Ultimately it is a question of money. Those issues will have to be worked out."Salve further said that the lessors argued everything before the NCLAT as well, but the appellate tribunal asked them to go to NCLT with their pleas..Advocate Anjana Gosain appeared for the DGCA and stated that it has not rejected any of the applications moved by the lessors and that these applications are in abeyance because the moratorium came into effect.Gosain said that the DGCA has to obey and honour the orders passed by the Court and the NCLAT and NCLT till the matter is resolved.“We are neither with the lessors nor with the lessees. Till such time the subject of moratorium is decided either by this court or by any other forum, we are bound by the orders,” she argued.