Delhi HC defers hearing of Go First against single-judge order on July 12

The Delhi High Court said on Tuesday that it was leaning towards suspending the Single Judge’s order issued by the same court allowing lessors access to the aircraft in Go First’s possession, but later postponed the hearing to July 12 (Wednesday).

The Court questioned whether the National Company Law Tribunal should decide on the deregistration status of aircraft held by the insolvent airline.

Under the Bankruptcy Code 2016 (IBC), the NCLT is the adjudicating authority for all matters.

The Board also asked lessors about the applicability of Section 14 of the IBC, which prohibits the alienation or sale of any assets owned by a company under insolvency.

Chief Advocate Rajeev Nayyar said the airline does not own the chartered aircraft (the original) as it was given to them on the lease.

He also argued that the stay would not apply to them because they had terminated their leases before Go First accepted insolvency. “Go First cannot use the aircraft because the rules say it cannot be used once the lease is terminated,” he said.

The deferral period applies when a company is admitted into bankruptcy and most or all legal remedies against that company are suspended.

The court also questioned the Director General of Civil Aviation (DGCA) about why aircraft lessors could not carry out maintenance. The DGCA said Go First is Continuous Airworthiness Maintenance Organization (CAMO) compliant, while lessors are not. CAMO is a set of approved standards used to certify aircraft airworthiness, and organizations that maintain aircraft must be in compliance with CAMO standards.

According to the DGCA, Civil Aviation Requirements (CAR) do not permit any organization other than those compliant with CAMO to maintain aircraft. The DGCA also said it would not be able to allow Go First to resume operations unless it was certain a CAMO-compliant organization was maintaining the aircraft.

Appearing as Resolution Professional (RP), Senior Advocate Neeraj Kishan Kaul said Go First is ready to start operations as soon as they get approval from the Directorate General of Civil Aviation. “How does the business of the aircraft go? The business continues when the aircraft flies. Why should they (lessors) object if the resumption plan is approved by the Directorate General of Civil Aviation? The whole purpose of reviving the debtor company is to resume its business. The revival plan is with the Directorate General of Civil Aviation Once approved by the DGCA, I will start flying.The appeal plan has been approved by the CoC (creditors’ company).The code of conduct or the lenders have been approved, and they are the most credible party.The DGCA is looking into the matter, he said.

Cowell argued that the lessors had terminated the aircraft leases due to insolvency and not due to default as they stated. “My educated friend is wrong. The lessors did not terminate their leases despite knowing full well that Go First had been in default since 2020, but they did as soon as Go First declared that it had filed for voluntary insolvency.”

The Delhi HC Single Judge Panel on July 5 allowed the Go First lessors to carry out inspection and maintenance related to the aircraft in the possession of the insolvent airline until the final disposal of the application petition (by the lessors).

Several aircraft lessors, including Pembroke Aviation, Accipiter Investments Aircraft 2 Ltd, EOS Aviation and SMBC Aviation, have filed a lawsuit in the High Court against the DGCA and the central government. They sought directions for restoring leased aircraft to the cash-strapped airline.

The National Corporation Act Court of Appeals (NCLAT) on May 22 upheld the NCLT’s May 10 order granting Go First bankruptcy.

The main council of NCLT in Delhi accepted Go First’s voluntary petition to initiate the insolvency settlement process and appointed an insolvency resolution specialist to take care of the airline.