27 July 2023 7:05 AM GMT
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Mahendra Khandelwal (President) and Shri Rahul Bhatnagar (Technical Member), while adjudicating a petition filed by Go Airlines (India) Limited, has permitted Go Airlines to operate the leased aircrafts in order to maintain the company’s status as a going concern. Background Facts M/s Go...
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Mahendra Khandelwal (President) and Shri Rahul Bhatnagar (Technical Member), while adjudicating a petition filed by Go Airlines (India) Limited, has permitted Go Airlines to operate the leased aircrafts in order to maintain the company’s status as a going concern.
M/s Go Airlines (India) Limited (“Corporate Debtor/Go Airlines”) is engaged in the business of Airlines and is the third largest airline operator in India.
Go Airlines filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), voluntarily seeking initiation of the Corporate Insolvency Resolution Process (“CIRP”) against itself. On 10.05.2023, the NCLT admitted the petition and initiated CIRP against Go Air.
While imposing Moratorium under Section 14 of IBC, the NCLT had specifically stayed the recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Corporate Debtor.
SMBC Aviation Capital Ltd, GY Aviation and SFV Aircraft Holdings (“Lessors”) had leased out aircrafts to Go Air. The Lessors contended that they had terminated the Lease Agreement of aircrafts prior to initiation of CIRP and imposition of moratorium. The assets belonging to third parties could not be covered under moratorium and must be reverted to the Lessors. Further, the aircraft engines are highly delicate and complex machines, therefore, require timely servicing and maintenance.
Accordingly, the Lessors filed an application under Section 60(5) of IBC before the NCLT seeking the following reliefs:
NCLT permits GO Airlines to operate flights
While considering the Lessor’s plea to refrain Go Airlines from operating or flying the leased aircrafts, the Bench observed that the Directorate-General of Civil Aviation (“DGCA”) has not deregistered the aircrafts. Therefore, it is open for Go Airlines to resume flight operations. In order to maintain Go Airlines as a going concern, the Bench has permitted it to operate the aircrafts. However, the safety norms prescribed by the Regulators have to be adhered.
“With respect to the interim prayers by the Applicant(s) i.e Corporate Debtor/ Respondent to refrain from operating or flying the Subject Aircraft owned by the Applicant for commercial use, it is pertinent to mention that the DGCA has not deregistered the aircraft, which means that they are available to the Corporate Debtor for use to resume operations. Therefore, as long as the aircrafts/engines are registered, they can be used for operating or flying to keep the Corporate Debtor as a going concern, however, within the safeguards/safety norms prescribed by the Regulators. Additionally, it has already been ordered by this Tribunal vide its Admission Order dated 10.05.2023, that it is the duty of the IRP to keep the Corporate Debtor as a going concern. In order to keep the Corporate Debtor as a going concern, the Aircrafts have to be flown and hence, the Aircrafts shall be with the Corporate Debtor and shall be operated by the Corporate Debtor. Therefore, we see no reason to allow this interim relief claimed by the Applicant(s).”
Aircrafts leased by lessor are Property as per S. 3(27) of IBC and subject to imposition of moratorium
While placing reliance on Section 3(27) and Section 14(1)(d) of IBC, the Bench took the view that the aircrafts leased to Go Airlines by Lessors come within the definition of ‘Property’ and thus moratorium can be imposed over leased aircrafts.
The Bench has rejected the prayers of the Lessors and has granted interim relief only to the extent of protection and maintenance of subject aircraft/engines by the Resolution Professional.
Case Title: Go Airlines (India) Limited
Case No.: Company Petition No. (IB)-264(PB)/2023
Counsel for Applicant: Mr. Anandh Venkataramani, Mr. Saket Satapathy, Mr. Anubhav Dutta, Mr. Priyal Shah, Mr. Sashank Mehta in IA/3048/2023
Mr. Ameya Gokhale, Ms. Meghna, Mr. Vaijayant Paliwal, Mr. Rishabh Jaisani, Mr. Harit Lakhani, Ms. Megha Khandelwal, Advs. in IA/3277/2023 & IA/3280/2023
Mr. Arun Kathpalia, Sr. Adv. with Ms. Meghna Rajadhyaksha, Mr. Vaijayant Paliwal, Mr. Rishabh Jaisani, Mr. Harit Lakhani, Ms. Megha Khandelwal, Advs. in IA/2944/2023
Mr. Chinmoy Pradip Sharma, Mr. Ritesh Singh, Mr. Ajay Kumar, Ms. Anchal Nanda, Mr. Hetram Bishnoi, Mr. Navneet Singh, Mr. Irfan Haseib, Mr. Babul, Mr. Krishnajyoti Deka, Advs. in IA/2850/2023
Mr. Arvind Nayar, Sr. Adv. with Mr. Prayaya Goyal, Amit Tiwari 06.07.2023 Mr. Chiranjivi Sharma, Ms. Apoorva Kaushik, Ms. Neetika Gharma, Mr. Girish Shankar, Mr. Shubham Pandey, Mr. Akshay Joshi, Advs. in IA/3254/2023
Counsel for CoC: Mr. Varghese Thomas, Mr. Fatena Chawla, Ms. Aditi, Mr Dheeraj Nair, Ms. Ridhima Sharma, Mr. Akhil, Mr. Angad Baxi, Ms. Vishrutyi Sahai, Advs.
Counsel for RP: Mr. Ramji Sriniwasan, Sr. Adv. with Mr. Vishnu Sriram, Adv.
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