Application to terminate leases of Go First’s lessors not rejected: DGCA

The Directorate General of Civil Aviation (DGCA) told the Delhi High Court that it had not rejected Go First’s lessors’ application to terminate the leases of aircraft held by the cash-strapped airline.

Appearing on the DGCA, lawyer Anjana Gosin said there was a glitch on the DGCA website which showed that a request by some lessors to terminate their aircraft leases had been rejected.

Gosin said that after the acceptance of Go First’s application for voluntary insolvency by the National Company Law Tribunal (NCLT), Delhi on May 10, all lessors were informed that the moratorium had been effected and their application to terminate the aircraft leases could not be processed.

Justice Tara Vitasta Ganju of Delhi High Court asked the DGCA why different responses were sent to different landlords regarding the status of termination of lease contracts. Judge Ganjo asked the aviation regulator to explain on June 1 whether the lessors have been informed by the DGCA about the current status of their termination application.

Go First’s lessors have moved the Supreme Court against the DGCA, seeking to de-register their aircraft leased to Go First. This was shortly after NCLAT endorsed the NCLT’s order on May 22.

The petitions were filed by Pembroke Aircraft Leasing 11 Limited, Accipiter Investments Aircraft 2 Limited, EOS Aviation 12 (Ireland) Limited, DAE SY 22 13 Ireland Designated Activity Company, SFV Aircraft Holdings IRE 9 DAC LImited, ACG Aircraft Leasing Ireland Limited, SMBC Aviation Capital Limited. They all gathered together to listen.

The Directorate General of Civil Aviation had previously informed the Supreme Court that it did not reject the request of the Go First lessors to cancel the registration of the aircraft, but it kept the (de-registration) process pending due to the moratorium.

The lessors told NCLAT that they had sought to deregister the Go First aircraft before accepting the insolvency claim. In response, Go First argued that the lessors had hastily filed for deregistration as soon as they became aware of the fact that the airline was filing for bankruptcy.

The lessors argued that in accordance with the Irrevocable Deregistration and Export Orders Authorization (IDERA), it was mandatory for the DGCA to deregister the aircraft upon their request.

The Supreme Court will continue to hear arguments in the case on June 1.

Go First’s Interim Resolution (IRP) expert on Tuesday told the Delhi High Court that parallel proceedings could not take place in the case and that the court could not interfere in the settlement process.

The IRP reiterated this again at the May 31 hearing.

Senior Advocate Harish Salif, who appeared before the IRP, told the court that a court of jurisdiction (the Supreme Court in this case) should not interfere with the settlement process after the insolvency application has been accepted by the NCLT.

He said there were several Supreme Court rulings that said that.

“The courts should not interfere with the insolvency and bankruptcy law (IBC) process because the essence of the process is that it is time-bound. Interests start to accumulate with each passing day on all receivables,” Salvi said.

He said if the court were to release the aircraft as per the request of the lessors, the airline would not be able to resume operations and thousands of employees would lose their jobs.

After the insolvency payment was accepted, the stay was in effect, meaning the suspension of all or some of its legal remedies against Go First. This means that lessors cannot take back their aircraft that were in the possession of the cash-strapped airline.

Salvi told the Supreme Court that if landlords want to challenge NCLAT’s decision, they must go to the Supreme Court. Furthermore, if they wanted assistance with deregistration of their aircraft or other remedies (malicious intent application against Go First), they could approach the NCLT as the NCLAT order instructed.