In yet another relief for low-cost carrier Go First, the National Company Law Appellate Tribunal (NCLAT) dismissed a plea by lessors seeking repossession of their aircraft on Monday.
An NCLAT bench of Justice (retd) J Ashok Bhushan and Justice (retd) Naresh Salecha said the petitioners could go back to the National Company Law Tribunal (NCLT) for relief.
The decision was along expected lines as the apex appellate tribunal may not have wanted to be seen as going against NCLT’s decision on an important case concerning the Insolvency and Bankruptcy Code (IBC) related to an airline company.
The IBC was enacted in 2016 with a view to offering a cohesive mechanism for insolvency and bankruptcy proceedings for companies, partnerships and individuals.
The Mumbai-headquartered Go First sent the global aviation industry into a tizzy after it applied for a ‘voluntary bankruptcy resolution’ with NCLT on May 2, claiming that technical glitches with next-generation engines supplied by Pratt & Whitney had hit normal operations leading to mounting losses.
The airline also announced the suspension of all flight operations from the following day.
Global lessor community nervous
“Due to the sudden moratorium in the Go First case and lessors’ inability to withdraw their aircraft, even after filing Irrevocable Deregistration and Export Request Authorisations (IDERAs) with the [aviation regulator] the Directorate General of Civil Aviation (DGCA) under Rule 30 (7) of the Aircraft Rules, 1937, the lessor community seems to be nervous and anxious at present,” informed managing partner at the law firm KLA Legal.
Several lessors from across the world have already approached various Indian courts including NCLT, NCLAT and the Delhi High Court seeking a return of their aircraft assets.
“We fear that at some point when Go First decides to resume operations, parts such as engines and landing gear from our aircraft on the ground may be cannibalised to operate flights by aircraft that are still airworthy,” the representative of an Ireland-based leading firm told Business Today.
Following Monday’s development, it is clear the final battle will be fought in the Supreme Court of India, with the lawyers for the affected leasing firms expected to petition an urgent hearing by a vacation bench of the apex court.