Delhi High Court reserves verdict on aircraft lessors' plea to de-register their planes leased to Go First airlines

The Delhi High Court on Thursday reserved its verdict on the petitions filed by lessors seeking deregistration of the aircrafts that they had leased out to Go First airlines which is currently under insolvency..A single judge bench of Justice Tara Vitasta Ganju extensively heard a batch of eight petitions filed by the lessors and reserved her orders on the interim relief applications. .The petitioners, 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 have sought deregistration of their aircrafts which are with Go First..The matter arose when Go First moved the National Company Law Tribunal (NCLT) in Delhi last month 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.They claimed that this cost the company a loss of over ₹10,800 crore.The NCLT Delhi 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. The plea was heard by Justice Ganju today after Justice Pratibha Singh recused from hearing the plea yesterday..The lessors pleaded that they had filed applications for de-registration of aircrafts but the same was rejected by the Director General of Civil Aviation (DGCA). They added that IBC was not a relevant provision for dealing with cases pertaining to de-registration and hence even the bankruptcy tribunals were not competent to hear their pleas. Their main argument was that they had terminated their lease agreement with the airline company prior to the company's application for insolvency in the NCLT.They prayed that the termination had been initiated because there had been multiple defaults by Go First.In light of this, they sought de-registration of their aircrafts with 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 deregistration 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 said.The Senior Counsel 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 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,” Gosain stated.