Today,26th April, A significant legal win secured by aircraft lessors against Go First Airlines, as ruled by the Delhi High Court. This victory marks a pivotal moment in the ongoing legal battle, showcasing the strength of the lessors’ position. The court’s decision is a noteworthy development in the aviation industry’s legal landscape, highlighting the complexities and challenges faced by both lessors and airlines in contractual disputes.
New Delhi: On Friday, the Delhi High Court mandated the de-registration of aircraft that leased to Go First Airlines by several companies. The court, under Justice Tara Vitasta Ganju, instructed the Directorate General of Civil Aviation (DGCA) to commence the de-registration process within a five-day working period.
Additionally, the court issued a prohibition against the financially troubled Go First Airlines, preventing it from operating the leased aircraft. Furthermore, the court imposed restrictions on the Resolution Professional (RP) overseeing Go First’s insolvency process. The RP now barred from removing or replacing any accessories, spare parts, documents, or other materials related to the aircraft.
Justice Ganju also directed the RP to ensure that all information and documentation pertaining to the aircraft are kept current and readily available to the lessors. This directive aims to maintain transparency and facilitate the administration of the airline’s assets during the ongoing legal and financial proceedings.
A comprehensive judgment yet to be released regarding the matter.
The Delhi High Court’s decision came in response to 14 petitions submitted by various companies that had leased aircraft to Go First Airlines, which currently in the midst of insolvency proceedings. The lessors had previously sought the de-registration of their aircraft through applications to the Directorate General of Civil Aviation (DGCA), which subsequently denied.
The petitioners argued that the Insolvency and Bankruptcy Code (IBC) lacks specific provisions to address issues related to aircraft de-registration. As a result, they contended that bankruptcy tribunals were not equipped to adjudicate their claims effectively.
Earlier, in an interim order dated July 5, 2023, the High Court granted the aircraft lessors permission to access the planes for necessary maintenance work. This interim measure was part of a broader directive that also permitted representatives of the lessors to inspect the aircraft. Additionally, the court imposed restrictions on Go First Airlines and its Interim Resolution Professional (IRP), specifically barring them from removing any aircraft parts or documents. This series of court orders highlights the ongoing legal efforts to safeguard the interests of the lessors amidst Go First Airlines’ financial turmoil.
Go First subsequently appealed against the initial court order to the Division Bench. The Division Bench opted not to overturn the original ruling issued by the single judge. However, it did amend the order slightly, granting Go First permission to perform maintenance on the aircraft, including their engines and other components.
The dispute escalated to the Supreme Court, which, on August 7, dismissed Go First’s appeal, effectively upholding the lower court’s decisions.
Previously, in a move to address its financial difficulties, Go First approached the National Company Law Tribunal (NCLT) in Delhi last year to commence the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC). On May 10, the NCLT Delhi admitted the airline’s plea, initiated a moratorium for the company, and directed the suspended board of directors to collaborate with the Interim Resolution Professional (IRP).
The NCLT’s directive emphasized,
“To ensure there are no layoffs during this period.”
This decision to enter into insolvency proceedings was later affirmed by the National Company Law Appellate Tribunal (NCLAT) on May 22, solidifying the legal framework for Go First’s restructuring efforts under the supervision of the IRP.