Aircraft sale proceeds to remain in escrow while NCLT decides airport dues priority and parties cooperate with removal

NCLAT addressed a dispute over priority of airport dues, including parking and hangar charges, in the liquidation of a corporate debtor whose aircraft had been sold. The tribunal did not decide on the priority issue, leaving it open for determination by NCLT. It directed the liquidator to keep the aircraft sale proceeds in an escrow account until NCLT finally resolves the questions of entitlement and priority. Simultaneously, the appellant was ordered not to obstruct removal of the aircraft and to fully cooperate with implementation of the NCLT's earlier order. The appeal was disposed of.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether a claimant in liquidation proceedings, asserting substantial airport dues and priority in the waterfall mechanism, can withhold cooperation in release/removal of auctioned aircraft from the airport, despite a consent order permitting sale and withdrawal of lien vis-à-vis the auction purchasers.

1.2 Whether, pending adjudication by the Adjudicating Authority on the quantum of the claimant's dues and its position in the waterfall mechanism, an arrangement should be put in place to secure the claimant's interests in the sale proceeds of the auctioned aircraft.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Obligation to cooperate with removal of aircraft and effect of consent order

Interpretation and reasoning

2.1 The consent order dated 07.08.2025 records that the claimant has no objection to the conclusion of the sale of three specified aircraft to the auction purchasers, releases all liens and encumbrances on those aircraft qua the auction purchasers from the Closing Date, and agrees to steps enabling the removal and export of the aircraft, subject to payment of specified "New Airport Dues" post-Closing Date.

2.2 The subsequent order dated 17.09.2025 directs the claimant to extend full cooperation and provide the draft NOC and other documentation within seven days, emphasizing that its lien would be dealt with in accordance with law dehors the consent for waiver of lien over the aircraft.

2.3 The Tribunal notes that the claimant's primary substantive concerns relate to (i) the quantum of its admitted claim and (ii) its priority in distribution in the liquidation waterfall, and that these issues are already seized of by the Adjudicating Authority in pending proceedings.

2.4 To balance the claimant's apprehensions with the rights of the auction purchasers to obtain peaceful use, possession and removal of the aircraft under the consent order, the Tribunal considers that the claimant's claim over sale proceeds, rather than a continuing operational obstruction to removal of the aircraft, is the appropriate mode of protection.

Conclusions

2.5 The claimant is not entitled to obstruct removal of the aircraft from the airport on the ground of unresolved disputes regarding quantum and priority of its dues.

2.6 The claimant is directed to lend full cooperation to the auction purchasers and not to obstruct removal of the aircraft covered by the consent order dated 07.08.2025, and to facilitate implementation of that order, including issuance of necessary documentation/NOC.

Issue 2 - Protection of claimant's interests pending determination of quantum and priority

Interpretation and reasoning

2.7 The Tribunal recognizes that two questions remain to be adjudicated by the Adjudicating Authority: (a) the quantum of dues admissible to the claimant and (b) its priority in the waterfall mechanism for distribution of liquidation proceeds.

2.8 To ensure that these pending issues are not rendered illusory by completion of sale and removal of the aircraft, the Tribunal considers it appropriate that the sale proceeds be preserved intact pending the Adjudicating Authority's decision.

Conclusions

2.9 The questions of (a) quantum of the claimant's entitlement and (b) its position in the waterfall mechanism are left open to be decided by the Adjudicating Authority in the pending applications.

2.10 The liquidator is directed to keep the sale proceeds of the aircraft in an escrow account until the above issues are finally resolved by the Adjudicating Authority.

2.11 The liquidator is granted liberty to approach the Adjudicating Authority for any clarification required regarding implementation of this escrow arrangement.

2.12 With these directions, the appeal stands disposed of without costs.

---