AI Drafter 
TaxTMI 
TaxTMI 
2023 (7) TMI 485
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.... 8088/2023 & CM APPL. 31155-31156/2023 For the Petitioner Through: Mr. Satvik Varma, Senior Advocate with Mr. Ravi Nath, Mr. Ankur Mahindru, Mr. Rohan Taneja, Mr. Aditya Kapur, Mr. Tanveer Oberoi, Mr. Tushar Mudgil, Mr. Mehul Jain, Mr. Tarun and Mr. Ankit, Advocates. Mr. Dayan Krishnan, Senior Advocate Mr. Mukul Rohtagi and Mr. Arun Kathpalia, Senior Advocates with Ms. Meghna Rajadhyaksha, Ms. Medha Sachdev, Mr. Rishabh Jaisani, Ms. Salonee Kulkarni, Ms. Riya Basu, Mr. Ajay Kumar, Mr. Kshitij Wadhwa, Mr. Aditya Dhupar and Ms. Diksha, Advocates. Mr. Ajay Kumar, Ms. Anchal Nanda, Mr. Hetram Bishnoi, Advocates. Mr. Rajiv Nayyar, and Mr. Amit Sibal, Senior Advocates with Ms. Marylou Bilawala, Mr. Premaya Goyal, Ms. Sharleen Lobo, Ms. Neetika Sharma, Mr. Girish Shankar, Mr. Chiranjin Sharma, Mr. Vinamra Kopariha and Mr. Mayank Bharghav, Ms. Apoorva Kaushik, Advocates Mr. Gaurav Mitra and Mr. Pai Amit with Mr. Nimish Vakil, Ms. Bhavna Duhoon & Mr. Rahat Bansal, Advocates. Mr. Nitin Sarin, Advocate. For the Respondents Through: Mr. Rajesh Gogna, CGSC for R1/UOI. Ms. Anjana Gosain, SPC with Ms. Avshreya Pratap Singh Rudy, Ms. Nippun Sharma, Advocates for R- 1/UOI/DGCA. Mr. Ramji Srin....
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....r, on the terms and conditions as set forth therein [hereinafter referred to as "the Lease Agreement(s)"]. In all, the Respondent/Go Air had leased 30 Aircraft from these 8 Petitioners. 3.2 For ease of reference, certain relevant details qua the Petitioners are reproduced in the table below: S.No Petition No. & Case Title and Interim Application Details Details of the Aircraft Leased Lease Agreement Date(s) IDERA Date(s) Lease Agreement Termination Date(s) Date of De-registration Application lodged with DGCA Whether an Appeal has been filed in the NCLAT? 1 WP(C) 6569/2023- ACCIPITER INVESTMENTS AIRCRAFT 2 LTD V UOI CM APPL. 25806/2023 FOR INTERIM RELIEF Airbus A320-214 MSN 5811 IRM VT-GOO 04.10.13 23.02.18 02.05.23 04.05.23 YES, appeal filed Co App (AT) (Ins) 631/23 2 WP(C) 6626/2023- EOS AVIATION 12 (IRELAND) LTD. Vs. UOI CM APPL. 26011/2023 FOR INTERIM RELIEF Airbus A320-271N MSN 11111 IRMVT-WDB 08.09.22 03.10.22 02.05.23 03.05.23 YES, appeal filed Co App (AT) (Ins) 633/23 3 WP(C) 7214/2023- PEMBROKE AIRCRAFT LEASING 11 LTD VS DGCA AND ORS CM APPL. 30784/2023 FOR INTERIM RELIEF Airbus A320NEO MSN ....
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....P 11.05.18 3. Airbus A320-271N MSN 8152 IRM VT-WGQ 11.05.18 4. Airbus A320-271N MSN 8209 IRM VT-WGR 17.07.18 5. Airbus A320-271N MSN 8273 IRM VT-WGS 17.07.18 6. Airbus A320-271N MSN 8382 IRM VT-WGT 30.08.18 7. Airbus A320-271N MSN 8458 IRM VT-WGV 11.05.18 8. Airbus A320-271N MSN 8464 IRM VT-WGW 11.05.18 9. Airbus A320-271N MSN 8482 IRM VT-WGX 11.05.18 10. Airbus A320-271N MSN 8503 IRM VT-WGZ 18.10.18 3.3 Pursuant to the execution of the Lease Agreement(s), the Respondent/Go Air also executed and submitted before the Respondent/DGCA, an Irrevocable De-Registration and Export Request Authorisation [hereinafter referred to as "IDERA"] for each Aircraft, as is defined in Rule 3(28A) of the Aircraft Rules, on dates as mentioned in the table hereinabove. 3.4 The IDERA, being almost identical in all the cases, is extracted from W.P. (C) 6626/2023 and reproduced below: "IRREVOCABLE DE-REGISTRATION AND EXPORT REQUEST AUTHORISATION [DATED] To Directorate General of Civil Aviation Re: Irrevocable De-Registration and Export Request Authorisation The undersigned is the registered operator of th....
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....e last several months, the Respondent/Go Air defaulted in payment(s) of the lease rental amounts to the Petitioners. The Petitioners sent individual notices of default to the Respondent/Go Air, inter-alia, requesting payment of arrears in lease rental due to them. Since, no complete payment was received by the Petitioners, the Lease Agreement(s) qua all 30 aircrafts were terminated by the Petitioners on 02.05.2023, 03.05.2023 and 04.05.2023. 3.8 The notice of default and termination sent by the Petitioners to Respondent/Go Air [hereinafter referred to as "Termination Notice"] inter-alia stated that the Respondent/Go Air was to immediately cease operation of the Aircraft; and the Petitioners were "assuming" possession of the Aircraft. The Termination Notice further directed the lessee to provide the necessary assistance and cooperation for deregistration and export of Aircraft. 3.9 As a necessary corollary to the Termination Notice, Application(s) for deregistration of the Aircraft with immediate effect, under Rule 30(7) of the Aircraft Rules, were filed by the Petitioners for deregistration of the Aircraft with the Respondent/DGCA [hereinafter referred to as "Deregistration A....
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....he deregistration of an Aircraft, there is also no need for a consent from the Respondent/Go Air, as per the Aircraft Rules. Rule 30(7) of the Aircraft Rules is reproduced below: "(7) The registration of an aircraft registered in India, to which the provisions of the Cape Town Convention or Cape Town Protocol apply, shall be cancelled by the Central Government, within five working days, if an application is received from IDERA Holder prior to expiry of the lease along with:- (i) the original or notarised copy of the IDERA; and (ii) a certificate that all Registered Interests ranking in priority have been discharged or the holders of such interest have consented to the deregistration and export: Provided that the deregistration of an aircraft by the Central Government under sub-rule (6) or sub-rule (7) shall not affect the right of any entity thereof, or any inter-governmental organisation, or other private provider of public services in India to arrest or detain or attach or sell an aircraft object under its laws for payment of amounts owed to the Government of India, any such entity, organisation or provider directly relating to the services provided by ....
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....nt given to it for finding out whether the terms of the Appellate Order had been complied with or not is not enough to deter the Courts from characterising the function as ministerial. On the facts and in the circumstances of this case by a writ of mandamus the said authority must be directed to perform its function...." (iv) Mr. Krishnan further sought to rely on paragraphs 22.4 and 25.4 of the judgment in the Awas case to state that once an IDERA has been submitted, the Respondent/DGCA has no option but to deregister the Aircrafts. (v) Mr. Krishnan further submits that even though the Respondent/Go Air has filed for Corporate Insolvency under the provisions of the IBC and a moratorium under Section 14 of the IBC has been imposed by order dated 10.05.2023 of the NCLT, and, since NCLT is not entitled to hear pleas in relation to the deregistration of the Aircraft, there is no alternative remedy available to the Petitioner except to approach this Court under Article 226 of the Constitution of India. (vi) It is further submitted that upon termination of the Lease Agreement(s), the Aircraft does not meet the mandatory requirements for flying under the Aircraft Act, 1934 and t....
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....ase Agreement(s) and the Respondent/Go Air has not challenged the termination of the Lease Agreement(s) before any forum and has, therefore, accepted the same. (iv) It is further submitted that in the event that interim protection is not granted to the Petitioners, it will lead to cannibalisation of the Aircraft, which is lying parked on the Tarmac and will cause grave loss to the Petitioners. 4.3 Submissions on behalf of Mr. Rajiv Nayyar, Senior Advocate: (i) Mr. Nayyar represents two Petitioners each of whom have 10 aircrafts, on lease to Respondent/Go Air. It is submitted that the Lease Agreement(s) for all 20 Aircrafts belonging to both Petitioners were terminated on 02.05.2023 i.e., 8 days prior to the date the NCLT admitted the Petition for voluntary insolvency as filed by the Respondent/Go Air. (ii) Mr. Nayyar draws the attention of the Court to the aircraft bearing no. MSN 6072 which is a subject matter of W.P.(C) 7369/2023 to submit that the Lease Agreement dated 01.05.2014 between SMBC Aviation Capital Limited and Respondent/Go Air expired by efflux of time on 13.05.2023. Mr. Nayyar submits that the mandatory maintenance/engine runs of MSN 6072 are required to....
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....ntenance of the Aircraft is sought. It is submitted that 17 boxes of the documents qua this Aircraft as well as the engine of the Aircraft have already been returned to the Petitioner by Respondent/GoAir on 03.05.2023. (ii) Mr. Kathpalia relies on Rule 3 (28A) of the Aircraft Rules to submit that now there is no uncertainty qua the definition of the IDERA and that it is the requisite document for the deregistration of the Aircraft. (iii) Mr. Kathpalia additionally argues that Rule 30(7) of the Aircraft Rules employs the term "shall" in contrast to "may" in Rule 30(6). In this regard, reliance is placed on the Judgment of the Supreme Court in Wellington Associates Ltd v Kirit Mehta (2000) 4 SCC 272 to submit that the legislature has deemed it fit to use the word "may" in Rule 30(6) and "shall" in Rule 30(7) and the provision has to be construed accordingly. Hence, in compliance with the Aircraft Rules, it is a mandatory obligation of Respondent/DGCA to deregister the Aircraft within a period of 5 days from the date of receipt of a Deregistration Application. (iv) Mr. Kathpalia further submits that the Petitioner in this Writ Petition has not filed any appeal to the NCLAT an....
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....s that the decisions of the NCLT are appealable before the NCLAT and the decisions of the NCLAT are appealable before the Supreme Court. While relying on the Order of the NCLAT dated 22.05.2023, he submits that as some of the Petitioners have already filed appeals before the NCLAT, and that the NCLAT have directed those Petitioners to approach the adjudicating authority under the IBC, i.e., the NCLT. Thus, the Petitioners cannot take an alternate remedy of filing a Writ Petition before a High Court for deregistration of their Aircrafts, as the remedy available to the Petitioners if they are aggrieved with the orders of NCLAT lies only before the Supreme Court. (iii) Mr. Salve relies on Section 63 of the IBC to submit that the Civil Courts have no jurisdiction, if the NCLT or the NCLAT is already seized of the insolvency of a Corporate Debtor. (iv) Relying on the judgment in the matter of Anand Rao Korada Vs. Varsha Fabrics (P) Ltd. and Ors. (2020) 14 SCC 198, Mr. Salve further submits that the Supreme Court have time and again frowned upon the High Court when the proceedings under the IBC have been stalled or impeded. (v) Mr. Salve submits that in terms of Section 14(1)(d)....
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....a Writ Court cannot adjudicate upon such contractual rights. (ii) Mr. Sethi further submits that the Respondent/DGCA is covered under the term "other authority", as set forth Section 14 (1) (a) of the IBC, therefore, a moratorium under the IBC will also apply to the Respondent/DGCA. He also submits that there is no definition of the term "asset" in the IBC and, the definition as envisaged under the Income Tax Act, 1960 can also be used. He relies on the extracted paragraph in Judgment of the Supreme Court in the case of Victory Iron Works Ltd. v Jitendra Lohia & Anr. 2023 scconline SC 260, in this regard as follows: "28. As we have pointed out earlier, the word "asset" is not defined, either in IBC or in any of the seven enactments referred to in Section 3(37) of the Code. But the word "asset" is defined in Section 102(2) of the Income Tax Act, 1961 to include "property or right of any kind". Though Section 102 applies as such to Chapter X-A of the Income Tax Act, the definition throws light on the fact that property or right of any kind is considered to be an asset." (iii) The Orders of the NCLT/NCLAT are "orders in rem" and have not been challenged by the Petitione....
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....s empowered under the IBC to pass an order. (vi) He further submits that Rule 32 A (Export of aircraft) and Rule 30 (7) (Deregistration of aircraft) of the Aircraft Rules should always be read together, and states that the safety of the Aircraft is of the utmost of importance and that the deregistration and the export of the Aircraft can only be done when the Aircraft is safe, subject to the Respondent/DGCA approvals. 6. SUBMISSIONS OF RESPONDENT/DGCA: Submissions by Ms. Anjana Gosain, Advocate: (i) Ms. Anjana Gosain submits that the Deregistration Applications were received either on the DGCA Portal and/or a hard copy was handed over by the Owners/Lessors of the Aircrafts as set out on the dates above. (ii) Ms. Gosain, while acknowledging that there is no quarrel with respect to the mandatory imposition of deregistration under Rule 30 (7) of the Aircraft Rules, submits that proceedings qua on the Deregistration Applications commenced from 04.05.2023, however, the 5 working days as is envisaged in the provision had not lapsed when the CIRP Order on 10.05.2023 was passed by the NCLT. This affected the process of deregistration. (iii) Ms. Gosain further submits that....
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....ction 14 of the IBC, the property is to either be in 'occupation of' or the 'possession of' the Corporate Debtor, however, in this case, the property, i.e., the Aircraft is neither occupied and nor in constructive or other possession of the Respondent/Go Air. (vi) The Petitioners seek to rely on the judgment of the Supreme Court in Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors (2020) 13 SCC 308, inter-alia to submit that the term 'possession' referred to under Section 14(1)(d) of the IBC refers only to legal possession and not forced/illegal possession. (vii) Relying on, Section 5(11) and 5(12) of the IBC, it is further submitted that there is a difference between (Insolvency) initiation date and Insolvency commencement date. Insolvency proceedings may have been initiated prior to the date of the filing of the Deregistration Application but the Commencement Date of the Insolvency is the date when the NCLT admits the Application, which is 10.05.2023. Therefore, as the termination of Lease Agreement(s) and Deregistration Applications were filed prior in time, the Moratorium as imposed would not apply to the Petitioner. (viii) The Respondent/DGCA is not ....
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....d Amount to Lessor when due and such failure continues for five Business Days from the date when the same became due; or" ..... 12.4 Involuntary Bankruptcy, Etc. A proceeding is commenced or a petition is filed, in either case, without the consent or application of Lessee, seeking (1) relief in respect of Lessee or of substantially all of its property or assets under any applicable bankruptcy, insolvency, liquidation, administration, receivership or similar Law, including any equivalent proceedings in Lessee Jurisdiction, (2) the appointment of a conciliator, receiver, trustee, custodian, administrator, sequestrator, examiner, insolvency resolution professional or similar official for Lessee or for substantially all of its property or assets, or (3) the liquidation, reorganization, dissolution, administration, examinership, corporate insolvency resolution process or winding up of Lessee, and such proceeding or petition continues undismissed for 60 days, save in respect of any frivolous or vexatious petition, which Lessee is contesting in good faith by appropriate proceedings and in respect of which adequate reserves have been made available by Lessee;........
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....any or corporation registered elsewhere than in India: Provided that such company or corporation has given the said aircraft on lease to any person mentioned in sub-clause (i), sub-clause (ii) or sub-clause (iii); and]..." 11.3 Rule 30(6)(iv) of the Aircraft Rules provides as follows: (6) The registration of an aircraft registered in India may be cancelled at any time by the Central Government, if it is satisfied that - (i) .... ..... (iv) the lease in respect of the aircraft, registered in pursuance of sub-clause (iv) of clause (a) of sub-rule (2) [has expired or has been terminated in accordance with terms of lease or];" [Emphasis supplied] 11.4 Thus, once an event of default has occurred and the Petitioners' have terminated the Lease Agreement(s) and commenced the process of de-registration of the Aircraft, such Aircraft cannot be flown. 12. The arguments of the Petitioners can, thus be summed up as follows: (i) The provisions of Rule 30 (7) of the Aircraft Rules makes it mandatory for deregistration of Aircraft, once the requisite documentation is provided by the Applicant. (ii) The assets belonging to a th....
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.... 14(1)(a) and Section 14(1)(d) read with Section 238 of the IBC prohibit the initiation or continuation of proceedings against the Corporate Debtor and the Petitioners are barred from recovery of any property when such property is occupied by or in possession of the Corporate Debtor. (v) In the event, the assets of the Corporate Debtor are alienated in the pendency of the proceedings, pertaining to the IBC, it would seriously jeopardise the interest of all stakeholders of the Corporate Debtor (Go Air Airlines) herein. 15. The purport of Rule 30 (7) of the Aircraft Rules has been dealt with by a Coordinate Bench of this Court in the Awas case wherein after analysis of the provisions of the Aircraft Rules, this Court held that the Respondent/DGCA has to proceed in accordance with Rule 30 (7) of the Aircraft Rules and the Court cannot interfere even on grounds of equity; keeping in mind, the protection of private business transaction law in India, international conventions such as Cape Town Convention must be followed; the disputes qua validity of the termination of the lease are not relevant for the purposes of deregistration and the contention that public interest will be impinge....
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....the subject lease agreements is not an ingredient of Article IX of the Protocol. All that the petitioners have to demonstrate qua this aspect, is that, they have exercised their right under IDERA, and thus, proceeded to terminate the subject lease agreements. There is no dispute that this aspect has been taken care of by the petitioners. The submission is, accordingly, rejected. 27. I am also not impressed by the submissions advanced on behalf of the Spicejet that de-registration and/or re-possession of the aircraft objects would impinge upon public interest. As indicated above, there is as much if not more public interest in ensuring that treaty obligations are honoured, and that, the parties adhere to their respective contractual obligations. The very fact that India has ratified the Convention and Protocol, gives rise to the presumption that it has been done in, the larger public interest, as against a narrow interest of one particular airline. The argument that passages have been booked with Spicejet, does not improve the case put forth by the respondents as this is a risk that every unsecured creditor will take vis-a-vis its transactions with the airline. This interes....
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....n their rights to do so. The scope and ambit of the powers of this High Court under Article 226 has been the subject matter of a catena of judgments. The principles of law therein have been succinctly enunciated in the judgment of the Supreme Court in the case of Radha Krishan Industries v. State of H.P. (2021) 6 SCC 771 as follows :- "27. The principles of law which emerge are that: 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternate remedy arise where: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is ch....
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....n Sub-Committee on Judicial Accountability v. Union of India [Sub-Committee on Judicial Accountability v. Union of India, (1991) 4 SCC 699] flows from the concept of a higher law, namely, the Constitution. Para 61 of the said decision captures this position as follows : (SCC pp. 738-39) "61. But where, as in this country and unlike in England, there is a written Constitution which constitutes the fundamental and in that sense a "higher law" and acts as a limitation upon the legislature and other organs of the State as grantees under the Constitution, the usual incidents of parliamentary sovereignty do not obtain and the concept is one of "limited government". Judicial review is, indeed, an incident of and flows from this concept of the fundamental and the higher law being the touchstone of the limits of the powers of the various organs of the State which derive power and authority under the Constitution and that the judicial wing is the interpreter of the Constitution and, therefore, of the limits of authority of the different organs of the State. It is to be noted that the British Parliament with the Crown is supreme and its powers are unlimited and courts have no power o....
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....t Leasing 11 Limited on 03.05.2023. 19. The Petitioners have made out a strong prima facie case in view of the provisions of the Aircrafts Rules as discussed herein. The balance of convenience is also in favour of the Petitioners. The Petitioners are suffering irreparable losses as the value of these Aircrafts are diminishing on a daily basis. 20. There can also be no denial of the fact that the Aircrafts of the Petitioners are extremely valuable and highly sophisticated equipment and require regular maintenance for their preservation. 20.1 Therefore, with a view to obviate any further losses, the following directions are being passed: (i) The Petitioners, their employees, agents, officers and/or representatives shall be permitted by the Respondent/DGCA and the appropriate Airport Authorities to access the Airport(s) where the 30 Aircrafts are parked [details of the Aircraft(s) is reproduced in the table in paragraph 3.2 herein] inter alia to inspect their respective Aircrafts, within the next 3 days; (ii) The Petitioners, their employees, agents, officers and/or representatives shall be permitted to carry out inspection and all maintenance tasks of the A....