NEW DELHI: The Delhi High Court has issued a stern show-cause notice to the resolution professional (RP) of the beleaguered airline Go First. The court is demanding explanations for the apparent willful non-compliance with its directives regarding the inspection and upkeep of leased aircraft. This legal move underscores the escalating tensions between aircraft lessors and the crisis-engulfed airline, spotlighting the intricate legal battles entwined with corporate insolvency proceedings.
Justice Tara Vitasta Ganju of the Delhi High Court articulated the court’s position clearly, stating,
“Prima facie, the orders of this court have been wilfully disobeyed by the respondent/ RP. Issue notice to show cause as to why proceedings of contempt be not initiated…”
This declaration came after allegations surfaced that the RP had neglected judicial mandates aimed at ensuring the maintenance and inspection of the lessors’ aircraft.
Amidst these legal skirmishes, the RP’s counsel asserted a commitment to revert to the agreed terms regarding aircraft maintenance, signaling a potential shift towards compliance. However, the court has scheduled a subsequent hearing for March 15, leaving the aviation community in suspense about the future course of these proceedings.
The heart of the dispute lies in the petition filed by DAE (SY22) 13 Ireland Designated Activity Company, among others, which accuses the RP of flouting the court’s orders. The petitioners lament the lack of regular maintenance, inadequate access to necessary documents, and restrictions on aircraft inspections, which they argue, contravene the court’s explicit instructions.
The narrative of non-compliance is not isolated, as several other lessors have echoed similar grievances, pointing to a systemic disregard for judicial orders. These allegations have led to a series of petitions by Go First’s lessors, urging the deregistration of their aircraft by the Directorate General of Civil Aviation (DGCA), aiming to reclaim possession from the faltering airline.
Scrutinizing the affidavits and arguments, the Delhi High Court noted a clear failure on the RP’s part to adhere to the prescribed maintenance routines and inspection protocols. The court highlighted that the RP had not followed through on essential directives, including granting access to aircraft records, conducting monthly inspections, and maintaining the aircraft as per established guidelines.
In response to these challenges, the court had previously allowed lessors to station security personnel to safeguard their idle aircraft and mandated the RP to share maintenance-related documents. These measures, part of an interim order, aimed to protect the lessors’ interests while the legal proceedings unfolded.
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Background and Broader Implications
The legal tussle traces back to the National Company Law Tribunal’s (NCLT) decision on May 10, 2023, which accepted Go First’s insolvency resolution petition and appointed Abhilash Lal as the interim RP. This move, while aimed at salvaging the airline, has led to a complex web of legal, financial, and operational challenges, particularly affecting the lessors due to the moratorium on financial obligations and asset transfers.
The lessors’ struggle for deregistration and repossession of their aircraft highlights the broader dilemmas faced by stakeholders in insolvency scenarios, especially in sectors as critical as aviation. With Go First ceasing operations since May 3, 2023, the outcome of these legal proceedings could set significant precedents for airline insolvency and lease agreements.
As the Delhi High Court continues to navigate these turbulent legal waters, the aviation industry watches closely, awaiting decisions that could redefine the landscape of aircraft leasing and maintenance obligations amidst insolvency proceedings. The coming hearings promise to shed further light on the intricate balance between corporate restructuring and the rights of lessors, potentially influencing future cases in this high-stakes domain.
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