2023 (8) TMI 1126 - HC - Insolvency and Bankruptcy

Court defers complex issues, directs parties to Single Judge. Interim directions modified for maintenance tasks and inspections.

GO AIRLINES INDIA LIMITED Versus SMBC AVIATION CAPITAL LIMITED & ORS., ACCIPITER INVESTMENTS AIRCRAFT 2 LIMITED AND ANOTHER, DAE (SY 22) IRELAND DESIGNATED ACTIVITY COMPANY & ORS., ACG AIRCRAFT LEASING IRELAND LIMITED & ORS., PEMBROKE AIRCRAFT LEASING 11 LIMITED. & ORS., EOS AVIATION 12 (IRELAND) LIMITED & ANR., GY AVIATION LEASE 1722 CO LIMITED AND ORS., SFV AIRCRAFT HOLDINGS IRE 9 DAC LIMITED & ORS.

The Court refrained from deciding on the complex issues at this stage and directed the parties to present their arguments before the Single Judge for ... Maintainability of application under Section 10 of the IBC - defaults in payment of lease rent by GoAir - interplay between the provisions of IBC, particularly the moratorium envisaged under Section 14 of IBC - legal obligations and rights derived from the Aircraft Rules as well as the lease agreements - Approval of resumption plan - HELD THAT:- Given the time-consuming nature of the approval process, the Court finds it prudent not to pass any judgement on the contentious issues outlined, at this juncture. The impugned interim directives primarily pertain to the inspection and maintenance of the aircrafts, which are designed to prevent cannibalisation and preserve their value and integrity - no severe prejudice would be inflicted upon GoAir in the event the matter is relegated to the learned Single Judge for final disposal of the writ petitions, especially in light of the fact that DGCA would require a minimum of fifteen days to decide on re-commencement of GoAir’s flights - it is deemed appropriate in the interest of justice to refrain from entertaining the appeals at this juncture. The learned Single Judge is however requested to endeavour to decide the writ petitions as expeditiously as possible, preferably on the next scheduled date of hearing. The pleadings have not been completed in the writ petitions. Accordingly, a week’s time is granted to GoAir as well as the DGCA to file their respective counter affidavits in the writ petitions pending before the learned Single Judge - Appeal disposed off. Issues Involved:1. Applicability of Moratorium under Section 14 of IBC.2. Rights of Lessors to seek de-registration of aircrafts.3. Jurisdiction of NCLT vs. Civil Court.4. Interim Reliefs and Maintenance of Aircrafts.Summary:1. Applicability of Moratorium under Section 14 of IBC:The primary contention by GoAir was that the moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) prohibits the recovery or re-possession of leased aircrafts by the Lessors during the Corporate Insolvency Resolution Process (CIRP). The Lessors' termination of lease agreements and subsequent applications for de-registration of aircrafts occurred before the moratorium commenced. GoAir argued that the relief sought by Lessors in the writ petitions would effectively allow recovery of the aircrafts, which is expressly prohibited during the moratorium.2. Rights of Lessors to Seek De-Registration of Aircrafts:The Lessors contended that their right to seek de-registration of the aircrafts under Rule 30(7) of the Aircraft Rules, 1937, is independent of the CIRP. They argued that the applications for de-registration were made before the moratorium took effect and that the DGCA should have processed these requests within five days. The Lessors maintained that the aircrafts were their assets and required regular maintenance to prevent value diminution.3. Jurisdiction of NCLT vs. Civil Court:GoAir argued that the NCLT has exclusive jurisdiction under Section 60(5) of the IBC to decide on issues related to the termination of lease agreements and the applicability of the moratorium. They referenced the NCLAT's directions, which allowed the Lessors to file appropriate applications before the NCLT for determination of these issues. The Lessors, however, defended the jurisdiction of the High Court, stating that the writ petitions were aimed at preserving their valuable assets through interim reliefs.4. Interim Reliefs and Maintenance of Aircrafts:The Single Judge had issued interim directions allowing the Lessors to access and maintain the aircrafts, emphasizing the need for regular maintenance due to their sophisticated nature. GoAir challenged these directions, arguing that they would impede the airline's potential revival and resumption of operations. The Court, however, found it prudent not to interfere with the interim directions, noting that the final judgment on the writ petitions was pending and that the DGCA's approval process for GoAir's resumption of operations would take at least fifteen days.Conclusion:The Court refrained from deciding on the complex issues at this stage and directed the parties to present their arguments before the Single Judge for final determination of the writ petitions. The interim directions were slightly modified to allow GoAir to carry out necessary maintenance tasks, while the Lessors were permitted to conduct periodic inspections. The Court emphasized that it had not expressed any opinion on the merits of the contentions and that the parties were free to pursue their claims before the appropriate forums.