TaxTMI 
TaxTMI 
2024 (5) TMI 207
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....P. (C) 9594/2023 & CM APPL. 39368/2023, W. P. (C) 9900-01/23 - -<br>Insolvency & Bankruptcy<br>HON'BLE MS JUSTICE TARA VITASTA GANJU Advocates who appeared in this case: For the Petitioners/ Lessors: Mr Mukul Rohtagi, Mr Rajiv Nayyar, Mr. Dayan Krishnan, Mr. Arun Kathpalia, Mr Kevic Setalvad, Mr Satvik Varma, Mr Amit Sibal, Sr. Advocates with Mr. Ravi Nath, Mr. Ankur Mahindro, Mr Nitin Sarin, Mr. Rohan Taneja, Mr. Pranaya Goyal, Mr. Aditya Kapur and Mr. Mehul Jain, Mr Ameya Gokhale, Ms. Meghna Rajadhyaksha, Mr. Vaijayant Paliwal, Ms. Medha Sachdev, Mr. Rishabh Jaisani, Ms. Riay Basu, Mr. Harit Lakhani, Ms. Mehak Nayak, Mr. Ajay Kumar, Mr. Hetram Bishnoi, Ms. Anchal Nanda and Mr. Ambarish Deenadhayalraj, Advs. Ms. Marylou Bilawala, , Mr. Dhruv Khanna, Ms. Sharleen Lobo, Mr. Chiranjivi Sharma, Ms. Priya Desai, Ms. Apoorva Kaushik, Mr. Vasu Gupta, Ms. Saakshi Malpekar, Ms. Nehal Gupta and Mr. Uday Mathur. Mr. Nimish Vakil, Mr. Amit Pai, Ms. Bhavana Duhoon, Mr. Anshul Syal and Mr. Abhiyudaya Vats, Mr Mukul Katyal, Ms Priyam Jinger, Mr. Soumil Gonsalves, Mr. Hetram Bishnoi and Ms. Aanchal Nanda, Advocates. For the Respondent/DGCA and Respondent/UOI: Mr Vikarmjeet Banerjee and Mr.....
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.... registration Appl. lodged with DGCA 1 WP(C) 6569/2023- ACCIPITER INVESTMENTS AIRCRAFT 2 LTD V UOI Airbus A320-214 MSN 5811IRM VT-GOO 04.10.13 23.02.18 02.05.23 04.05.23 2 WP(C) 6626/2023- EOS AVIATION 12 (IRELAND) LTD. Vs. UOI Airbus A320-271N MSN 11111 IRM VT-WDB 08.09.22 03.10.22 02.05.23 03.05.23 3 WP(C) 7214/2023- PEMBROKE AIRCRAFT LEASING 11 LTD VS DGCA AND ORS Airbus A320NEO MSN 7858 IRM VT-WGN 02.05.18 04.05.18 02.05.23 03.05.23 4 WP(C) 7369/2023- SMBC AVIATION CAPITAL LIMITED AND ORS Vs. UNION OF INDIA AND ORS Airbus A320-214 MSN 5675 IRM VT-GON 24.07.13 25.07.13 02.05.23 [For all Aircraft] 04.05.23 [For all Aircraft] Airbus A320-271N MSN 7047 IRM VT-WGA 02.05.16 25.05.16 Airbus A320-271N MSN 7074 IRM VT-WGB 02.05.16 20.06.16 Airbus A320-271N MSN 8498 IRM VT-WGY 09.10.18 23.10.18 Airbus A320-214 MSN 5990 IRM VT-GOQ 30.10.18 13.02.14 Airbus A320-271N MSN 8656 IRM VT-GOP 09.10.18 27.12.18 Airbus A320-214 MSN 5809 IRM VT-WGA 30.09.12 13.03.19 Airbus A320-271N MSN 7330 IRM VT-WGE 24.01.17 24.01.17 Airbus A320-214 - MSN 6072 IRM VT-GOR 01.05.14 28.12.20 Airbus A320-271N MSN 7205 IRM VT -WGD 01.12.16 06.12.16 5 WP(C) 7663/....
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....Airbus A320-271N MSN 8757 VT-WJI 12.04.2019 04.07.19 Airbus A320-271N MSN 8850 VT-WJK 12.04.2019 31.05.19 12 W.P.(C) 9901/2023 STAR RISING AVIATION 13 LIMITED v UOI through DGCA Airbus A320-271N MSN 9264 VT-WJN 14.10.2019 14.10.19 03.05.23 09.05.2023 Airbus A320-271N MSN 9358 VT-WJP 14.10.2019 07.11.19 Airbus A320-271N MSN 9375VT-WJQ 14.10.2019 18.11.19 Airbus A320-271N MSN 8785 VT-WJR 09.12.2019 10.12.19 13 W.P.(C)-10327-2023 BLUESKY 31 LEASING COMPANY LIMITED V DGCA Airbus A320-271N MSN 8785 VT-WJJ 27.09.2019 27.09.2019 04.05.2023 10.05.2023 Airbus A320- 271N MSN 9200 VT-WJL 14 W.P.(C)-10386-2023 BLUESKY 19 LEASING COMPANY LIMITED v DGCA Airbus A320-271N MSN 9218 VT-WJM 27.09.2019 (Notation and amendment agreement on 18.06.20) 10.07.2020 04.05.2023 10.05.2023 Airbus A320-271N MSN 9412VT-WJS Airbus A320-271N MSN 9598 VT-WJT 3.3 Pursuant to the execution of the Lease Agreements, Respondent/Go Air also executed and submitted before Respondent/DGCA, an Irrevocable De-Registration and Export Request Authorisation [hereinafter referred to as "IDERA"] for each Aircraft, on dates as mentioned in the Table hereinabove. 3.4 The IDERA, is defined in R....
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....cy and Bankruptcy Code, 2016 [hereinafter referred to as "IBC"] for initiation of voluntary Corporate Insolvency Resolution Process [hereinafter referred to as "CIRP"]. 3.10 By its order dated 10.05.2023 [hereinafter referred to as "Insolvency Commencement Order"], the NCLT admitted the Petition filed by Respondent/Go Air and as a consequence of which, a 'moratorium' was imposed under Sub-Section (1) of Section 14 of the IBC qua Respondent/Go Air. The relevant extract of this order is below: "48. Hence, in view of the unpaid debt subsisting above Rs. 01 Crore and the default committed by the Corporate Applicant towards the same, and the Corporate Applicant being not disqualified under Section 11 of IBC 2016, we have no other option but to admit the present Application under Section 10 of IBC 2016. Accordingly, the Application of the Corporate Applicant is admitted. As a necessary consequence, the moratorium in terms of Section 14(1) (a), (b), (c) & (d) is declared, and the following prohibitions are imposed: "(a) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including the execution of any judgment, decree or order in any ....
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....cy filed by Respondent/GoAir and the declaration of a moratorium on 10.05.2023. However, NCLAT directed that the NCLT adjudicate the claims of the Petitioners/Lessors and Respondent/RP of Go Air in relation to the applicability of moratorium on the Aircraft. 3.12 This Court is informed that these proceedings before the NCLT are still pending. 3.13 In the meantime, by letters/orders dated 11.05.2023 and 12.05.2023, the Petitioners/Lessors were informed by Respondent/DGCA that the Deregistration Application(s) have been rejected/application(s) cannot be processed in view of the Insolvency Commencement Order passed by the NCLT. Aggrieved, the present Petitions have been filed. 4. This Court by its common Judgment dated 05.07.2023 [hereinafter referred to as "05.07.2023 Judgment"] decided the interim applications seeking maintenance of the Aircraft as filed by 8 Petitioners/Lessors (who were parties at that time). The following directions were passed: "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 ....
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....ously as possible, preferably on the next scheduled date of hearing. .... 16. In the meantime, direction (ii) contained in paragraph No. 20.1 of the impugned judgement is modified to the extent that GoAir, through RP, is permitted to carry out all maintenance tasks of the thirty subject aircrafts, their engines and other parts and components, which are parked at various airports, with due permissions mandated under extant rules/ law. The Lessors are also free to carry out periodic monthly inspections of the aforesaid aircrafts in accordance with law." [Emphasis supplied] 4.2 The DB Order was then challenged by Respondent/RP of Go Air before the Supreme Court. The Supreme Court by its order dated 07.08.2023, dismissed the appeal as filed by the Respondent/RP of Go Air, directing that the jurisdictional issue raised in the appeal can be raised in the proceedings before this Court. The relevant extract is below: "1. Proceedings under Article 226 of the Constitution are pending before a Single Judge of the High Court of Delhi. The petitions are being argued on a day to day basis. The jurisdictional issues which are sought to be raised in these proceedings can be addressed bef....
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....A)(4) also states that a maintenance/handling flight is requisite every two years, during a storage period, so that the Aircraft is preserved. It cannot be disputed by the either party that these Aircrafts have not been grounded for two years. Therefore, reliance placed on the Airbus Manual extract, as has been done by the Respondent No. 9 /RP of Go Airlines, cannot be accepted either. 13. Thus, the contention of the Respondent No. 9/RP of Go Airlines, that the reason, 2 of the 10 Aircrafts have been flown by Go Airlines is that these were handling flights forming part of the scheduled maintenance activity for the Aircraft, is misconceived. 14. The Respondent No. 9/RP of Go Airlines has also not been able to show any urgency or any grave imminent threat to these Aircrafts to suddenly and without any prior notice, compel the Respondent No. 9/RP of Go Airlines to fly these Aircrafts. Prima facie, the term "scheduled maintenance" cannot be understood to include flying the Aircrafts even if it is a non-commercial flight. Thus, Respondent No. 9/RP of Go Airlines cannot be permitted at this stage, to continue with these handling/maintenance flights. 15. In view of the foregoing dis....
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....ntation the Aircrafts, except with prior written approval of the Petitioners;" CM APPL.53422/2023 [Application to bring on record subsequent events and urgent directions] & Notification No. S.O. 4321(E) dated 03.10.2023 9. On 03.10.2023, the Ministry of Corporate Affairs issued a notification under Section 14(3) of the IBC [hereinafter referred to as "the MCA Notification"] wherein aircraft, aircraft engines and airframes were kept outside the purview of the IBC. The MCA Notification declared that the provisions in relation to moratorium as set forth under Section 14 of the IBC shall not apply to agreement governed by the Cape Town Convention and Cape Town Protocol. 9.1 Subsequently, the Petitioner/Lessor in W.P.(C) 7774/2023, filed an Application bearing number CM APPL. 53422/2023 to place on record the MCA Notification and averred that in view of the MCA Notification, it is incumbent on Respondent/DGCA to deregister the Aircraft in accordance with the Aircraft Rules. It was contended by the Petitioners/Lessors that they were constrained to approach this Court in view of the fact that the Respondent/DGCA has failed to deregister the Aircraft and now that the MCA Notification ha....
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....r and once again it was contended that only the NCLT had jurisdiction to decide on the assets of the corporate debtors and not this Court. It was further submitted that similar prayers had been made by the Petitioners/Lessors before the NCLT and that the Petitioners/Lessors are forum shopping. 10.3 With a view to protect the Aircraft and to prevent further cannibalisation, this Court by its judgment dated 12.10.2023 passed directions to maintain and observe the integrity of the Aircraft. The relevant extract is reproduced below: "18. It is clear from the aforesaid discussion that the term Aircraft includes Aircraft Documents, the inspection granted to the Petitioners/Lessors would necessarily have to include Aircraft Documents to facilitate and make the inspection of the Aircraft meaningful. 19. In any event, it has now been more than five months, since the Aircraft were grounded by the Respondent/RP of GoAir. A review of the documents and photographs filed by the Petitioners/Lessors show the evident cannibalization of the Aircraft. The Petitioners/Lessors have made out a prima facie case and it has become necessary for this Court to pass additional directions to protect these....
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....o the Petitioners/Lessors. 11.1 The Respondent/RP of Go Air, on the other hand, stated that there has been no willful disobedience of the judgments and orders of this Court, but that the Respondent/RP of Go Air has been taking all the steps to effectuate such compliance. However, due to circumstances outside the control of the Respondent/RP of Go Air, the compliance of the orders passed by this Court and the Division Bench of this Court could not be done. 11.2 By an order of this Court dated 07.03.2024, notice was issued against Respondent/RP of Go Air to show cause as to why contempt proceedings be not issued against Respondent/RP of Go Air for non-compliance of the orders of this Court. No reply was filed by Respondent/RP of Go Air, on the date the judgment in this matter was reserved by this Court. SUBMISSIONS OF THE PETITIONERS/LESSORS: 12. Learned Counsels appearing on behalf of the Petitioners/Lessors, made the submissions which have been set out below, in brief: A. Deregistration is mandatory under Rule 30 (7) 12.1 The Petitioners/Lessors aver that Rule 30(7) of the Aircraft Rules, is clear. It is mandatory for the Respondent/DGCA to deregister the Aircraft if the requ....
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....iation Manual"] Clause no 7.6, to submit that for an Aircraft to be air-worthy requires a valid and subsisting Lease Agreement which is not available in the present case. 12.5 Section 14(1)(d) of the IBC prohibits the recovery of any property by an owner or lessor where such property is 'occupied by' or 'in the possession' of the corporate debtor, during the period of moratorium. However, in this case, the property, i.e., the Aircraft are neither occupied and nor in constructive possession of the Respondent/Go Air. Relying on Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors (2020) 13 SCC 308; it has been submitted that the term "possession" contemplated in Section 14(1)(d) of the IBC must necessarily mean lawful possession. C. Termination not challenged by Respondent/RP of Go Air 12.6 The legality of the Termination Notice is not a subject matter of the present Petition and the Respondent/RP of Go Air has not challenged the Termination Notice in any Court of law. In any event, a challenge to the Termination Notice(s) would be subject to the jurisdiction of the Courts in England in terms of the Lease Agreement. D. NCLT has no powers to Deregister an Aircraft -....
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.... Section 238 of the IBC does not affect rights vested in parties by other legislations. Explanation (a) to Section 18 of the IBC clarifies that assets held under trust or contractual agreements by third parties are not within the purview of "assets" as defined in the Section 14 of the IBC. As such, the Aircraft, previously held under a contractual agreement, are not subject to the provisions of Section 18 of the IBC. Additionally, Section 63 of the IBC provides that the Suits or proceedings in which NCLT or NCLAT have jurisdiction cannot be entertained by Civil Courts. However, this Court is exercising its jurisdiction not as a Civil Court but under its writ jurisdiction under Article 226 of the Constitution. 12.11 The Petitioners/Lessors while relying on Paragraph 11 of the Respondent/DGCA's Counter-Affidavit, asserted that no shortfalls actually existed in the Deregistration Applications as had there been any deficiencies, it was the duty of the Respondent/DGCA to communicate these to the Petitioners/Lessors. Instead, the Petitioners/Lessors received letters from the Respondent/DGCA dated 12.05.2023 declining to deregister the Aircraft stating that the deregistration request....
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....the CIRP/motivated by the initiation of the CIRP. E. Condition of Aircraft/Cannibilisation 12.15 The Petitioners/Lessors have submitted that the Aircraft that are the subject matter of these Petitions have been grounded and are lying in the "Long Term Storing Unit" in respective Airports all around India. These Aircraft are admittedly not being flown by the virtue of the grounding notices. The Aircraft are not being maintained in the prescribed manner and are being cannibalised at the various Airports. Reliance is placed on the contentions as set forth in CM Appl. 47257/2023 and CM Appl. 47071/2023 as well. F. Prayer on directions for Export of Aircraft 12.16 At the outset, learned Counsel for the Petitioners/Lessors in W.P.(C) 6569/2023, W.P.(C) 6626/2023, W.P.(C) 7214/2023, W.P.(C) 7663/2023, W.P.(C) 7774/2023, W.P.(C) 9594/2023, W.P.(C) 10327/2023 and W.P.(C) 10386/2023 have contended that the Petitioners/Lessors would limit their prayers in the Petition(s) to the deregistration of the Aircraft by the Respondent/DGCA. Rule 32A of the Aircraft Rules, which deals with the export of an Aircraft is an event subsequent to its deregistration and for the export of the Aircraft to h....
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....me shall not be adjudicated by this Court under Article 226 of the Constitution. 13.3 Since, it was the NCLT that passed the Insolvency Commencement Order that has been relied upon by the Respondent/DGCA in the impugned communication, it can only be the NCLT that shall have the exclusive jurisdiction to hear the cases in relation to this impugned communication. B. The DGCA did not deregister the Aircraft in view of the moratorium imposed by NCLT's order of 10.05.2023. Not a ministerial Act and only NCLT has jurisdiction to decide this issue 13.4 As a result of the moratorium imposed by the Insolvency Commencement Order, the Respondent/DGCA did not process the Deregistration Applications. This act of the Respondent/DGCA is thus, not a ministerial act. The Respondent/DGCA exercises powers as a quasi-judicial body and this power has been exercised by it in the present case which cannot be termed as a ministerial act. 13.5 In any event, the Deregistration notices and the applications filed thereto shall be treated to be nullity in as the same were only motivated by insolvency of Respondent/Go Air. The Petitioners/Lessors are using the Termination Notices as a smokescreen, which is ....
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....ts clearly show that the termination notices that were sent by the Petitioners/Lessors were arising out of the Insolvency application filed by the Respondent/Go Air and thus are to be heard by the NCLT. D. Section 60(5) of the IBC cannot be given a narrow interpretation. The IBC has the widest amplitude to deal with all types of matters and the forum for adjudication is the NCLT and NCLAT 13.8 The attention of this Court was then brought to the Termination Notices that were sent to the Respondent/Go Air. It was contended that 11 out of the 14 Petitioners/Lessors have stated that the reason for the termination was on account of the insolvency that has been initiated by the Respondent/Go Air. The termination by the Petitioners/Lessors is directly linked to the insolvency declaration. 13.9 Section 60(5) of the IBC sets out that there shall be only one fora for adjudication of all the claims that arise out of or in relation to IBC, shall be dealt by that fora only, i.e. NCLT. The attention of the Court was then drawn to the report of the Bankruptcy Law Reforms Committee [Committee appointed by Ministry of Finance for the draft Insolvency and Bankruptcy Code on 22.08.2014.] to submit....
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....constructive or actual possession. Relying on the Arcelor Mittal India private Limited v. Satish Kumar Gupta and Ors. (2019) 2 SCC 1, an alternate argument has been raised to submit that antecedent facts which are in reasonable proximity to the insolvency commencement date, at the time of a resolution plan, can always be seen by the Courts to prevent persons attempting to wriggle out of such plans. E. IBC is a Special Statute and a complete code - Its provisions will prevail over other statutes 13.14 The IBC is a complete code in itself, and the principles enunciated therein shall be taken be sacrosanct, reliance in this regard was placed on the judgment of the Supreme Court in the case of Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd through the director and Ors (2021) 9 SCC 657. 13.15 Section 18(f) and Section 14 of IBC have to be read harmoniously with each other, so that the true intention of the legislature can be construed, which is that the IBC is a special legislation, and its object is revival/resurrection of a corporate debtor and the preservation and the maximisation of its assets. The moratorium under Section 14 of the IBC is the "cal....
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....n the judgments in the case of Zile Singh v. State of Haryana and Ors (2004) 8 SCC 1 and Monnet Ispat & Energy Ltd. v. Union of India and Ors. (2012) 11 SCC 1. 13.21 The MCA Notification is required to be construed to be prospective in nature as it is not clarificatory. In any event, an executive action cannot be given retrospective effect when the parent act does not endow the executive authority with the power to pass notification with retrospective effect. Reliance in this regard was made in the case of Director General of Foreign Trade and Anr v. Kanak Exports and Anr. (2016) 2 SCC 226 and Assistant Excise Commissioner, Kottayam and Ors. v. Esthappan Cherian and Anr (2021) 10 SCC 210. 13.22 NCLT and the NCLAT has previously decided on the prospective/retrospective application of notifications issued by Central Government under IBC, reliance was placed on the judgment of the NCLAT in this regard in the case of Madhusudan Tantia v. Amit Choraria and Anr. 2020 SCC Online NCLAT 713. Therefore, NCLT will be the most appropriate authority for the interpretation of the retrospective/prospective application of the MCA Notification and not this Court. H. Inapplicability of judgments ....
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....Rules and notification, cannot nullify the legislative mandate of the enactment. Delay, if any, was attributable to the Governmental authorities, who had failed to issue necessary notification within time. Therefore, it was stated that if the express intent of a notification is retrospective, then the same shall be construed to be retrospective. The Notification thus, can only mean to operate from the date of the enactment of IBC as the provision, i.e., Section 14(3) was enacted on 28.05.2016 and the MCA Notification will be applicable from the date of the initiation of IBC. B. Letters/notices issued by DGCA in pursuance of NCLT orders of moratorium 14.5 The Respondent/DGCA has not rejected any application of the Petitioners/Lessors and the Deregistration Application(s) have only been put in abeyance till the Court has decided on the issues raised pursuant to the Insolvency Commencement Order dated 10.05.2023. The Respondent/DGCA will abide by any direction as passed by this Court in regard to the deregistration of the Aircraft. SUBMISSIONS OF THE RESPONDENT / AIRPORTS AUTHORITY OF INDIA: 15. Learned Counsel appearing on behalf of the Respondent/Airports Authority of India has ....
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....lications for different cause of actions and remedies in different forums, and is therefore, not forum shopping. A comparison of the pleadings filed before the NCLT and this Court shows that the prayers in the application filed before the NCLT are distinct from those in the Petition filed before this Court. The Petitioners/Lessors have reserved their rights before the NCLT, to raise the plea of deregistration before an appropriate fora which in the present case can only meant to be this Writ Court, as earlier demonstrated. 16.5 The Petitioners/Lessors in WP(C) 7663/2023 has categorically submitted that the objection of the Respondent/RP of Go Air in relation to the similar prayers being prayed for before the NCLT is without any basis as the same was dropped by the Petitioners/Lessors in the Rejoinder that was filed before the NCLT. This submission was also recorded in the Order dated 12.10.2023. In this regard, the Petitioners/Lessors rely on the extract of the Rejoinder filed before the NCLT. C. Termination not arising out of or in relation to Insolvency 16.6 Termination of the lease was on account of non-payment of lease rental by the Respondent/Go Air since 2020 onwards as al....
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....ings - the insolvency was admitted on 20.11.2018 and the termination notice was issued on 01.05.2019. In addition, the Resolution Professional (therein) had challenged the termination before the NCLT. In the present case, the Respondent/RP of Go Air has not challenged the termination. Hence, the Gujarat Urja case cannot be relied upon. 16.11 The facts in the Rajendra K. Bhutta case and Gujarat Urja case are distinguishable from the facts of this case and in both these cases, the termination of the lease agreement and power purchase agreement respectively, took place after the moratorium was declared by the corporate debtor. However, it is not in dispute that the Petitioners/Lessors in the present case have terminated the Lease Agreements and they have filed their respective Deregistration Applications before the Insolvency Commencement Date - 10.05.2023. It has also been submitted that the principle laid down by the Court is on the basis of the facts of the case, therefore, facts of the case are also to be looked into before applying the principles enunciated in the case. 16.12 Emphasis has again been laid on Neesa Leisure case to state that Section 14 of the IBC will have no app....
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....the judgments that have been relied upon by the Respondent/RP of Go Air with regard to the MCA Notification state that for a legislation to be retrospective, the statue shall either implicitly or explicitly state the same. Therefore, the MCA Notification shall be read to be retrospective as the same is implicitly retrospective in regard to it being issued under Section 14(3) of the IBC. This approach has also been adopted by the Supreme Court in the case of Ramakrishnan case. Therefore, the Notification shall read to be clarificatory and shall be treated to be retrospective. 16.18 Reliance was placed on the judgment of the Supreme Court in the case of Nagindas Ramdas v. Dalpatram Ichharam alias Brijram and Ors. (1974) 1 SCC 242, to submit that admissions, if true and clear, are by far the best proof of the facts admitted. Admissions in pleadings or judicial admissions made by the parties or their agents, stand at a higher footing than, evidentiary admissions under Section 58 of the Evidence Act, 1872. It was therefore submitted that the affidavit of the Respondent/DGCA admitting to the fact that the MCA Notification shall be retrospective, can only be meant to read as retrospectiv....
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....and connected Applications [Applications for impleadment of CoC] 17. At the outset, this Court deems it necessary to deal with the Application filed by the Committee of Creditors of the Respondent/Go Airline [hereinafter referred to as 'CoC'] for impleadment. It was contended on behalf of the learned Senior Counsel for the CoC that a CoC was constituted for revival of the Respondent/Go Air comprising of five banks as its members being: (i) Central Bank of India; (ii) Bank of Baroda; (iii) Deustche Bank; (iv) DB International Asia Limited; and (v) IDBI Bank Limited. 17.1 The CoC has contended that it has a total claim of Rs. 5124 crores, out of which Rs. 5117 crores is an admitted debt. It is further contended that during the CIRP period, the CoC exercises statutory control to ensure revival of the corporate debtor - Respondent/Go Air and the rights of the CoC will be affected by any orders passed in the present Petition. It is thus prayed that the CoC be impleaded as a party to the present Petition. 17.2 The CoC has relied on the judgment of the Supreme Court in the case of Indus Biotech Pvt Ltd v. Kotak India Venture (Offshore) Fund (Earlier known as Kotak India Vent....
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....RP"] or the Resolution Professional/RP and it is the IRP/RP who conducts and manages the operations of the corporate debtor during this period. The IRP/RP under Section 25(2)(b) represents and acts on behalf of the corporate debtor with third parties and exercises rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings. The relevant extract is below: "Section 23: Resolution professional to conduct corporate insolvency resolution process (1) Subject to section 27 the resolution professional shall conduct the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the corporate insolvency resolution process period. Provided that the resolution professional shall continue to manage the operations of the corporate debtor after the expiry of the corporate insolvency resolution process period, until an order approving the resolution plan under sub-section (1) of section 31 or appointing a liquidator under section 34 is passed by the Adjudicating Authority. (2) The resolution professional shall exercise powers and perform duties as are vested or conferred on the interim resolution profes....
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.... (a) it has been registered, and (b) it bears its nationality and registrations marks and the name and residence of the owner affixed or painted thereon in accordance with rule 37 or, in the case of aircraft registered elsewhere than in India, in accordance with the regulations of the State in which it is registered: Provided that the prohibition imposed by this rule shall not apply to aircraft flown in accordance with the special permission in writing of the Central Government and subject to any conditions and limitations which may be specified in such permission." 19.2 The registration and marking of an Aircraft is provided for in sub-Rules (1) and (2) of Rule 30 of the Aircraft Rules. The Petitioners/Lessors contended that 54 Aircraft which form the subject matter of the present Petition, are all owned by companies or corporations registered outside India and are leased to Respondent/Go Air, and thus, fall in Category A in Rule 30(2)(iv) of the Aircraft Rules. The relevant extract is below: "30. Certificate of Registration - (1). The authority empowered to register aircraft and to grant certificate of registration in India shall be the Central Government. The certificat....
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.... 1.1 Rule 5 of the Aircraft Rules, 1937 requires that no person shall fly or assist in flying any aircraft unless it has been registered and bears its nationality and registration marks and the name and residence of the owner affixed or painted thereon in accordance with Rule 37. 1.2 Rule 30 of the Aircraft Rules, 1937 empowers the Central Government to register an aircraft and to grant a Certificate of Registration in respect thereof. Rule 31 to 37 A further describe the legislation with regard to registration of aircraft, its cancellation and change of ownership, the Nationality and Registration Marks and the manner in which they are to be affixed." 19.6 Paragraph 7.6 of the Civil Aviation Manual states that the registration of the Aircraft will be valid so long as its lease is in force. The relevant extract is as follows: "7. Registration Certificate and Validity of Registration of Aircraft: ..... 7.6 In case of aircraft registered under paragraph 3.1 (iv), the registration will be valid so long as the lease is in force and therefore, the period of validity of Certificate in such cases shall be restricted to the date of lease agreement." [Emphasis supplied] 19.7 Thus....
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....XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment. In accordance with that Article, the undersigned hereby requests: i. recognition that the authorised party or the person it certifies as its designee is the sole person entitled to: a) procure the de-registration of the aircraft from the Indian aircraft register maintained by the Directorate General of Civil Aviation for the purposes of Chapter III of the Convention on International Civil Aviation, signed at Chicago, on 7 December 1944, and b) procure the export and physical transfer of the aircraft from India; and confirmation that the authorised party or the person it certifies as its designee may take the action specified in clause (i) above on written demand without the consent of the undersigned and that, upon Such demand, the authorities in India shall co-operate with the authorised party with a view to the speedy completion of such action. The rights in favour of the authorised party established by this instrument may not be revoked by the undersigned without the written consent of the authorised party. GO AIRLINES (INDIA) LIMITED By:....
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.... a statutory obligation is cast upon the Central Government acting through the Respondent/DGCA to cancel the registration of such Aircraft and this is a mandatory obligation. Rule 30(7) is extracted 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, without seeking consent or any document from the operator of the aircraft or any other person, if an application is received from IDERA Holder along with:- (i) the original or notarised copy of the IDERA recorded with the Director-General; and (ii) a priority search report from the International Registry regarding all registered interests in the aircraft ranking in priority along with a certificate from the IDERA Holder that all Registered Interests ranking in priority to that of the IDERA Holder in the priority search report have been discharged or that the holders of such interest have consented to the deregistration and export of the aircraft: Provided that such cancellation of registration of the aircraft shall not effect the right of the Central Government or ....
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.... the DGCA had any discretion in the matter has got removed. Upon the creditor fulfilling the conditions prescribed in clause (i) and (ii), of sub-rule (7), of Rule 30, the DGCA is mandatorily required to cancel the registration. 22.4[sic:22.5]Therefore, keeping in mind the aforesaid, in my view, a mandamus shall issue to the DGCA to act in a particular manner, as the conditions prescribed for acting in that manner, as required by law, stand fulfilled. Any other direction would only frustrate the object and purpose with which the amendment has been brought about in Rule 30. I am, thus, persuaded to direct the DGCA to de-register the aircraft objects, which are subject matter of the captioned writ petitions. ..... 25.4 There is another aspect, which has to be kept in mind, while dealing with such like matters; which is that, a court ought not to proceed in a manner which retards funnelling of much needed private finance for business transactions in India. This is not to say where legitimate legal rights surface under the Municipal Law, the court would ignore them. Sans such legitimate legal rights, the courts must prod the concerned statutory authorities to act in consonance wi....
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....terest cannot come in the way of a larger public interest, which is the obligation undertaken by the contracting State to honour its commitments under the Convention and the Protocol." [Emphasis supplied] 23.3 While Rule 30(6) of the Aircraft Rules uses the term "may", Rule 30(7) of the Aircraft Rules uses the term "shall be cancelled". This signifies that the legislative intent that by use of the word "shall" [See: Wellington Associates Ltd v. Kirit Mehta; (2000) 4 SCC 272 and Jamatraj Kewalji Govani v. State of Maharashtra; (1967) 3 SCR 415], the intention was to make Rule 30(7) of the Aircraft Rules, mandatory. This Court concurs with the judgment of a Coordinate Bench of this Court in the Awas case. The Respondent/DGCA is thus, mandatorily required to cancel the registration subject to the fulfilment of the documents and conditions as set forth in Rule 30(7) of the Aircraft Rules. Jurisdiction of High Court under Article 226 of the Constitution vis-à-vis NCLT/NCLAT a creature of Statute - No power of Judicial Review 24. As discussed hereinabove, the provisions qua registration/deregistration of an Aircraft form the subject matter of the Aircraft Act and Aircraft Rul....
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....238 of IBC to contend that the provisions of the IBC shall override all other statutes in force. 25.2 It is apposite to refer to sub-Section (5) of Section 60 of the IBC at this stage, which starts with a non obstante clause and states that the NCLT shall have the jurisdiction to entertain applications, claims and/or questions of law or facts which arise out of insolvency or liquidation proceedings of a corporate debtor. Section 60(5) of the IBC reads as follows: "60. The Adjudicating Authority for corporate persons. ...... (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code." [Emphasis sup....
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....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 of judicial review of legislation. 30. The NCLT is not even a civil court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer " [Emphasis supplied] 25.4 In addition, the Embassy case also sets out the jurisdiction of the NCLT under the provisions of sub-Section (5) of Section 60 of the IBC and hold that although this provision is comprehensive in its sweep but, it cannot be deemed to include a decision taken by a government or statutory authority in the realm of public law. The power of judicial review of governmental authorities cannot be exercised by the NCLT. The relevant extract of the Embassy case is set forth below: "37. From a combined re....
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.... the property of the corporate debtor and that the word "property" is interpreted in Section 3(27) to include even actionable claims as well as every description of interest, present or future or vested or contingent interest arising out of or incidental to property and that therefore the Interim Resolution Professional is entitled to move the NCLT for appropriate orders, on the basis that lease is a property right and NCLT has jurisdiction under Section 60(5) to entertain any claim by the corporate debtor. 39. But the said argument cannot be sustained for the simple reason that the duties of a resolution professional are entirely different from the jurisdiction and powers of NCLT. In fact Section 20(1) cannot be read in isolation, but has to be read in conjunction with Section 18(1)(f)(vi) of the IBC, 2016 together with the Explanation thereunder. ... 41. Therefore in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the corporate debtor has to exercise a right that falls outside the purview of the IBC, 2016 especially in the realm of the public law, they cannot, through the resolution professional, take a bypa....
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.... proceed after declaration of moratorium, under Section 14 of the I&B Code." [Emphasis supplied] 26.2 The NCLT does not have the authority to assume the jurisdiction exclusively conferred on the High Courts and the Supreme Court and which cannot be curtailed by any statute. No Nexus between Deregistration and Insolvency 27. Respondent/RP of Go Air has averred that there is a clear nexus between deregistration and insolvency of Respondent/Go Air. Hence, the NCLT would have exclusive jurisdiction under Section 60(5) of the IBC to adjudicate all matters "arising out of" or "in relation to" the insolvency proceedings of the corporate debtor - Respondent/Go Air. 27.1 The Respondent/RP of Go Air has relied upon the judgments in the TATA Consultancy case and Gujarat Urja case to submit that sub-Section (5) of Section 60 of the IBC cannot be given a narrow interpretation. It provides that IBC has widest amplitude to deal with all such matters and forum for the same is NCLT/NCLAT. It has additionally been contended that the issues raised by the Petitioners/Lessors before this Court have also been raised by the Petitioners/Lessors before the NCLT and since the Petitioners/Lessors have ....
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....y, effective and efficient manner. Pursuing this theme in Innoventive [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407 : (2018) 1 SCC (Civ) 356] this Court observed that : (SCC p. 422, para 13) "13. One of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process." The principle was reiterated in Arcelor Mittal [Arcelor Mittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] where this Court held that : (SCC p. 88, para 84) "84. ... The non obstante clause in Section 60(5) is designed for a different purpose: to ensure that NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings." Therefore, considering the text of Section 60(5)(c) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the corporate debtor. However, in doing so, we iss....
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....aced on the judgment of this Court in Embassy Property [Embassy Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308], where this Court held that NCLT and NCLAT did not have jurisdiction over a dispute arising under the Mines and Minerals (Development and Regulation) Act, 1957, in relation to the refusal of the State of Karnataka to extend a mining lease. The primary consideration which weighed with this Court while coming to its decision was that NCLT cannot have jurisdiction on matters of public law. This Court held : (SCC p. 331, para 37)... "37. ... Clause (c) of sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the Government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution" appearing in clause (c) of sub-section (5)." (emphasis in original) In the present case the decision to terminate PPA has not been taken by any governmental or statutory....
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.... condition. The Lease Agreements further provide for payment of monthly lease rental by Respondent/Go Air to the Petitioners/Lessors. 29.1 The lease commences with the delivery of the Aircraft to Respondent/Go Air and sets forth that in the event of a default, such as non-payment of lease rentals or other payments, under the Lease Agreements or breach of any of the terms of the Lease Agreements, the Lease Agreements shall stand terminated in accordance with the terms and conditions thereof. 29.2 The Lease Agreements further provides that once an event of default occurs, the Lessee - Respondent/Go Air shall take all steps necessary for the deregistration of the Aircraft. Although, the terms of each Lease Agreement is at variance with each other, the salient terms mentioned herein form part of most of the Lease Agreements. An extract of the Lease Agreement, as taken from the Lease Agreement filed in W.P. (C) 7214/2023 extracting some relevant clauses is reproduced below: "...4.1 Subject to Clause 3 (Conditions Precedent), at Delivery the Aircraft shall be delivered to and accepted by Lessee in "as is" condition and shall become subject to and governed by this Agreement, the Term ....
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....s of demand; (b) Lessee fails to comply with any provision of Appendix 7 (Insurances) or any Insurance required to be maintained under Appendix 7 (Insurances) is cancelled, invalidated or terminated or notice of cancellation is given in respect of any such Insurance, save that no Event of Default shall occur under this paragraph (b) provided that: (i) Lessee promptly grounds the Aircraft upon first becoming aware of any circumstance set out in this paragraph (b); and (ii) such cancellation, termination or notice of cancellation: (1) is part of a wider programme of cancellation by the insurers as a result of an event or series of events affecting the insurance market generally; and (2) the Aircraft remains grounded, stored and maintained in accordance with the requirements of this Agreement and fully covered by a "ground risk only" insurance policy for so long as any circumstance set out in this paragraph (b) is continuing; (c) Lessee fails to comply with any provision of any Transaction Document as a result of which Lessor is adversely affected and, save to the extent such failure to comply is the subject of a separate grace period in this Appendix 9 Part A, if such fai....
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....nded, cancelled, withdrawn, terminated or not renewed, or otherwise ceases to be in full force; (g) Lessee: (i) is, or is deemed for the purposes of any relevant law to be, unable to pay its debts in excess of US$15,000,000 as they fall due; (ii) is declared insolvent by the relevant adjudicating authority in India; (iii) admits, in writing, inability to pay any of its debts as they fall due; or (iv) suspends making payments on all or any class of its debts or announces, in writing, an intention to do so; (h) (i) a meeting of the shareholders of Lessee is convened to consider a resolution to present an application for an administration order or any such resolution is passed; (ii) the filing of a petition by Lessee, or the passing of any final non-appealable order by the relevant authority, In each case, with a view to composition, assignment or arrangement with any creditor of, or rehabilitation, administration, custodianship, liquidation, or dissolution of Lessee or any other insolvency proceedings involving Lessee; (iii) any final non-appealable order is made for any composition, assignment, arrangement, rehabilitation, administration, custodianship, liquidation, ....
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....ting, to dispose, convey or transfer all or a material part of its assets or consolidates or merges with any other person, whether by one or a series of transactions, related or not, save where such disposal or threatened disposal, consolidation or merger is for the purpose of a solvent rearrangement, reconstruction or amalgamation; (l) the existence, validity, enforceability or priority of the rights of Lessor as owner and the rights of Lessor as lessor in respect of the Aircraft or the rights of the Security Trustee and Lenders as mortgagee and as assignee under the Mortgage and the Assignment are challenged by Lessee or any other person claiming by or through Lessee; (m) any event or series of events occurs, which in the reasonable opinion of Lessor, is likely to have a Material Adverse Effect; (n) any air traffic control authority (or any authority on their behalf) or any other authority notifies Lessor that there are navigation, landing, airport or similar charges due from Lessee where a failure to pay any such amounts could reasonably be expected to give rise to any claim or lien over the Aircraft, and such charges remain outstanding for a period of thirty (30) days fro....
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....ny Financial Indebtedness of Lessee in excess of US$15,000,000 becomes due and is not paid within any applicable grace period or is declared due prior to the date when it would otherwise have become due; or any action is taken to attach, foreclose upon, dispose of or repossess the collateral held as security for any such Financial Indebtedness; or any "default" or "event of default" or "termination event", howsoever described, occurs under any other agreement, lease, hire purchase, conditional sale or credit sale agreement of Lessee involving individually or in the aggregate obligations of Lessee in excess of US$15,000,000 and the lessor, vendor, conditional seller or other counterparty thereunder takes action to exercise any right or remedy to enforce any such document; or (r) an event of default (howsoever defined therein) has occurred and is continuing under any Other Agreement." [Emphasis supplied] 29.4 The above clauses show that the Lease Agreements between the parties was a commercial transaction wherein the Petitioners/Lessors had for payment of lease rentals and other charges, leased out the Aircraft to the Respondent/Go Air and this Lease Agreement contained various d....
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.... 19 LEASING COMPANY LIMITED v DGCA 3 13.12.22 27.02.23 04.05.2023 29.7 One such default notice sent on 31.07.2020 to Respondent/Go Air by the Petitioners/Lessors in W.P.(C)7214/2023 is extracted below: "NOTICE OF DEFAULT (MSN 7858) Go Airlines (India) Limited ("lessee") ......... By fax, electronic mail and post Dear Sirs 31 July 2020 GO AIRLINES (INDIA) LIMITED - LEASE AGREEMENT DATED 2 MAY 2018 IN RESPECT OF ONE (1) AIRBUS A320-NEO AIRCRAFT WITH MANUFACTURER'S SERIAL NUMBER 7858 (THE "AIRCRAFT") 1. We refer to: (a) the lease agreement dated 2 May 2018 in relation to the Aircraft made between Pembroke Aircraft Leasing 11 Limited (the "Lessor") and the Lessee (the "lease Agreement"); (b) the Relevant Agreement; and (c) the rent deferral letter dated 9 June 2020 made between the Lessor and the Lessee in relation to the Lease Agreement (the "Deferral letter"). 2. Capitalised terms used in this Notice but not defined herein shall have the meanings given to them in the Lease Agreement. 3. In this Notice, the provisions of Appendix 1 Part B of the Lease Agreement will be deemed to be set out herein in their entirety but as if each reference therein to ....
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....ications in this Notice are unilateral and effective without acknowledgment. 6. Governing Law 6.1 This Notice and any non-contractual obligations arising out of or in connection with it shall be governed by, construed and take effect in accordance with English law. Yours faithfully -sd- For and on behalf of Pembroke Aircraft Leasing 11 Limited as Lessor" [Emphasis supplied] 29.8 Similarly, the Petitioners/Lessors in W.P.(C) 6626/2023 sent a notice of default dated 17.03.2023 to Respondent/Go Air for payment of rental dues of as outstanding. The relevant extract of this default notice is reproduced below: "We refer to the Aircraft Lease Agreement (A320NEO MSN 11111) between Eos Aviation 12 (Ireland) Limited ("Lessor") and Go Airlines (India) Limited ("Lessee") dated 8 September 2022 in respect of one Airbus A320-271N aircraft bearing manufacturer's serial number 11111 (as amended from time to time, the "Lease"). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed thereto in the Lease. As Servicer for Lessor, we hereby notify you that: (1) an Event of Default has occurred and is continuing under Section 12.1 ....
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...., labour action or lockdown; and b. Section 12.3 (Voluntary Bankruptcy, Etc.) of the Lease Agreement as Lessee has commenced bankruptcy proceedings in India. 3. As a result of the Events of Default which are continuing, pursuant to the provisions of Section 13.1 of the Lease Agreement, Lessor hereby notifies Lessee that with immediate effect from the date of this notice: (a) the leasing of the Aircraft under the Lease Agreement is terminated; (b) Lessee is directed to immediately redeliver the Aircraft to Lessor (together with, for the avoidance of doubt, the complete set of Aircraft Documentation) at Nagpur Airport, India (or such other location as Lessor may specify) and in the return condition required by the provisions of the Lease Agreement; and (c) Lessee's operation and possession of the Aircraft after the date of this notice without Lessor's express prior written consent is prohibited, other than in connection with fulfilling the requirements set out in paragraph (b) above. 4. Lessor reserves all of its surviving rights and remedies under the Lease Agreement and applicable law in connection with the Lease Agreement (and all Defaults and Events of Default whi....
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....at the insolvency had arisen out of the failure on account of a U.S. Company called Pratt and Whitney who supplied defective engines for the Aircraft, which resulted in initiation of legal proceedings by Respondent/Go Air against the said company. It is apposite to extract Paragraph 13.3 and 13.4 of the Counter-Affidavit filed by Respondent/RP of Go Air in W.P.(C)7369/2023 [which is similar to the Counter-Affidavit(s) filed in all other Petitions] in this regard. "13.3. The grounding of the aircrafts on account of engine failures led to a steady decline in the number of operational aircraft of the Answering Respondent from 2020 onwards. This meant a reduction in the operational fleet size and consequently reduced cashflows. Coupled with the onset of the Covid-19 pandemic and worldwide restrictions on travel, there was a sharp decline in revenues of the Corporate Debtor. 13.4. Singularly owing to the failure of engines supplied by P&W [Pratt & Whitney] and refusal to resolve the issue by adhering to its contractual obligations, the stress on the cashflow of the Answering Respondent continued to increase and cash flows of the Answering Respondent continued to remain stressed due ....
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....low: "28. In Gujarat Urja [Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209 : (2021) 4 SCC (Civ) 1], the contract in question was terminated by a third party based on an ipso facto clause i.e. the fact of insolvency itself constituted an event of default. It was in that context, this Court held that the contractual dispute between the parties arose in relation to the insolvency of corporate debtor and it was amenable to the jurisdiction of NCLT under Section 60(5)(c). This Court observed that : (SCC pp. 262-63, para 69) "69. ... NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of corporate debtor... The nexus with the insolvency of corporate debtor must exist." (emphasis supplied) Thus, the residuary jurisdiction of NCLT cannot be invoked if the termination of a contract is based on grounds unrelated to the insolvency of corporate debtor. 29. It is evident that the appellant had time and again informed corporate debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that the termination of the facilities agreement was motivated by the ....
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....mination has not been challenged by Respondent/Go Air or by Respondent/RP of Go Air in any judicial forum. As discussed above, the termination of the Lease Agreements between the Petitioners/Lessors and Respondent/Go Air was on account of breaches of the Lease Agreements which included non-payment of the lease rentals over extended period of time. The primary and most proximate cause for the termination was the triggering of the event of default clause of the Lease Agreement was on account of continuous non-payment of lease rentals for the Aircraft. These cannot be equated with the conditions "arising out of" or "in relation" to the insolvency. The default notices/emails were being sent to Respondent/Go Air from the year 2020 onwards and, prior to the Termination Notice(s), Respondent/Go Air had received several such default notices. Although, the Termination Notices do refer to the insolvency - being one of the many events of default - the insolvency is not what has led to the termination. The ratio of the Tata Consultancy case thus, squarely applies in the facts of the present case. The termination thus, does not arise out of the insolvency and is certainly not a consequence of t....
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..... The Court emphasized that Section 238 is relevant primarily in cases involving corporate debtors' properties and assets, not when third parties like MCGM are involved. It held that Section 238 of the IBC would only supersede other laws if there's any inconsistency between such law and the IBC. 32.4 The Supreme Court in the Abhilash Lal case has held as follows: 47. In the opinion of this Court, Section 238 cannot be read as overriding MCGM's right-indeed its public duty-to control and regulate how its properties are to be dealt with. That exists in Sections 92 and 92-A of the MMC Act. This Court is of the opinion that Section 238 could be of importance when the properties and assets are of a debtor and not when a third party like MCGM is involved. Therefore, in the absence of approval in terms of Sections 92 and 92-A of the MMC Act, the adjudicating authority could not have overridden MCGM's objections and enabled the creation of a fresh interest in respect of its properties and lands. No doubt, the resolution plans talk of seeking MCGM's approval; they also acknowledge the liabilities of the corporate debtor; equally, however, there are proposals which env....
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....he present case, the defaults in the Lease Agreements are the cause of the termination and not the insolvency. There is no dispute that the defaults were much prior in time to the moratorium. 32.8 There is no inconsistency between the provisions of moratorium under Section 14 of the IBC and the Aircraft Rules. The Cape Town Convention and the Cape Town Protocol on Aircraft as applicable to India in terms of the Declaration of Accession adopts a procedure for insolvency and the steps to be taken with respect of any Aircraft, Airframes and related objects. In any event, my ambiguity on this issue has been done away with by the MCA Notification, which makes it abundantly clear that aircraft, aircraft engines and airframes are excluded from the purview of the provisions of the IBC. This is, therefore a moot issue now which does not require to detain this Court further. MCA Notification dated 03.10.2023 - Prospective or Retrospective 33. The MCA Notification was issued by the Ministry of Corporate Affairs in pursuance of the Cape Town Convention, and came into effect on 03.10.2023. The MCA Notification was issued under Section 14(3) of the IBC and sets forth that aircraft equipment, ....
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....pondent/RP of Go Air that notifications which are not clarificatory in nature such as the MCA Notification are always prospective. Thus, the effect of the MCA Notification would not be available to the Petitioners/Lessors in the present case. In addition thereto, Respondent/RP of Go Air submitted that the Petitioners/Lessors are filing successive applications seeking interim relief, to delay the adjudication of the present Petitions. 33.4 In view of the objections raised by the Respondent/RP Go Air and to obviate delay in the final hearing of the present case, it was directed by this Court by its order dated 10.11.2023, that the application shall be heard and finally decided along with the present Petitions. 34. As discussed above, learned counsel appearing on behalf of Respondent/RP of Go Air has submitted that in the first instance, the MCA Notification is not applicable to the present case in view of the fact that the moratorium already stood imposed by the NCLT. It is further contended that the MCA Notification could not be considered as being clarificatory in nature as it was in pursuance of an executive action and any executive action is a delegated legislation. Since, dele....
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....icate whether the MCA Notification is prospective or retrospective. 34.2 Respondent/UOI and Respondent/DGCA jointly filed a short affidavit in respect to this application. In their short affidavit dated 01.11.2023, it was submitted that the MCA Notification was a necessary adjunct to a provision in the statute and it is required to be effective from 28.05.2016, the date on which Section 14(1) of the IBC has come into force [The IBC including Section 14 has come into effect on 28.05.2016.]. Additionally, it was averred that the MCA Notification being clarificatory in nature would have to be considered to be applicable retrospectively. It is apposite to extract the relevant portion of this affidavit: "6. ....... It is submitted that the executive's notification being procedural and a necessary adjunct to a section in a legislation, i.e., section 14(1) of the Insolvency and Bankruptcy Code ("IBC"), 2016 in this case, it needs to be given effect from the date on which the section comes into force. As such, the above mentioned Notification was issued u/s 14(3) of the IBC 2016, and would have to be considered to have a retrospective effect being clarificatory in nature. However,....
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....e Cape Town Convention and Cape Town Protocol has been devalued. Consequently, Lease Agreements have become unfavourable for airlines in India as premiums have significantly increased. 34.6 The Petitioners/Lessors, in the alternate contended that their plea for deregistration would exist even without the MCA Notification as the Aircraft Rules are unambiguous. 35. The Supreme Court in the Zile Singh case has discussed the principles of construction of statutes. It has been held that unless the words in the statute are sufficient to show the intention of the legislature to affect vested rights, the statute is deemed to be prospective. However, it has also been held that where a new law is made to cure an issue for the benefit of the community, the presumption against retrospectivity is rebutted. The following extract is relevant: "13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there a....
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....tention of the legislature can be clearly and doubtlessly spelt out, the inhibition contained in the rule against perpetuity becomes of doubtful applicability as the "inhibition of the rule" is a matter of degree which would "vary secundum materiam" (p. 226). Sometimes, where the sense of the statute demands it or where there has been an obvious mistake in drafting, a court will be prepared to substitute another word or phrase for that which actually appears in the text of the Act (p. 231). [Emphasis supplied] 35.2 The Zile Singh case has thus suggested four relevant facts to construe whether the legislature had sufficiently expressed its intention qua retrospectivity. These are: (i) General scope and purview of the statute; (ii) The remedy to be applied; (iii) The earlier state of the law; and (iv) What was in the contemplation of the legislature at the time of its promulgation. 36. The issue before this Court rests on the applicability of the moratorium imposed under Section 14 of the IBC, on the mandatory deregistration process as set forth under Rule 30(7) of the Aircraft Rules. Exceptions to the moratorium process under Section 14(1) of the IBC are already set out ....
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....cle XXX(3). Alternative A 2. Upon the occurrence of an insolvency-related event, the insolvency administrator or the debtor, as applicable, shall, subject to paragraph 7, give possession of the aircraft object to the creditor no later than the earlier of: (a) the end of the waiting period; and (b) the date on which the creditor would be entitled to possession of the aircraft object if this Article did not apply. 3. For the purposes of this Article, the "waiting period" shall be the period specified in a declaration of the Contracting State which is the primary insolvency jurisdiction. 4. References in this Article to the "insolvency administrator" shall be to that person in its official, not in its personal, capacity. 5. Unless and until the creditor is given the opportunity to take possession under paragraph 2: (a) the insolvency administrator or the debtor, as applicable, shall preserve the aircraft object and maintain it and its value in accordance with the agreement; and (b) the creditor shall be entitled to apply for any other forms of interim relief available under the applicable law. 6. Sub-paragraph (a) of the preceding paragraph shall not preclude the u....
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....Article X(2), it shall specify the time-period required thereby. 3. A Contracting State may, at the time of ratification, acceptance, approval of, or accession to this Protocol, declare that it will apply the entirety of Alternative A, or the entirety of Alternative B of Article XI and, if so, shall specify the types of insolvency proceeding, if any, to which it will apply Alternative A and the types of insolvency proceeding, if any, to which it will apply Alternative B. A Contracting State making a declaration pursuant to this paragraph shall specify the time-period required by Article XI. 4. The courts of Contracting States shall apply Article XI in conformity with the declaration made by the Contracting State which is the primary insolvency jurisdiction. 5. A Contracting State may, at the time of ratification, acceptance, approval of, or accession to this Protocol, declare that it will not apply the provisions of Article XXI, wholly or in part. The declaration shall specify under which conditions the relevant Article will be applied, in case it will be applied partly, or otherwise which other forms of interim relief will be applied." [Emphasis supplied] 38.1 The Cape Tow....
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....alendar months, thus, the possession of the Aircraft in terms of the Cape Town Protocol would be required to be given at the end of the period of two months. Paragraph 9 of Article XI also provides that the exercise of remedies under the Cape Town Protocol should not be prevented or delayed after the date specified. The "waiting period" in the present case thus, would be two calendar months from the date of MCA Notification came into force or 03.12.2023. 38.4 The clarificatory Affidavit dated 01.11.2023 jointly filed by the Respondent/UOI and Respondent/DGCA states that the MCA Notification is a necessary adjunct to Section 14(1) of the IBC and needs to be given effect from 28.05.2016, the date on which the Section came into force. A plain reading of the MCA Notification does show the deliberate and conscious mention of the Cape Town Convention and Cape Town Protocol and its accession on 31.03.2008. 38.5 A press release issued by the Ministry of Civil Aviation on 06.10.2023 also gives an insight into the reasons for the MCA Notification. It states that the MCA Notification is in consonance with the India's treaty obligations and the exclusion of aircraft, aircraft engines, airfra....
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....Rules and given the fact that India is a signatory to the Cape Town Convention and Cape Town Protocol since 31.03.2008 and at the time of its adoption of the Declaration of Accession has clearly agreed to the adoption of "Alternative A" of Article XI of the Cape Town Protocol for "remedies on insolvency", this Court is of the considered view, for the reasons stated herein, that the words "aircraft, aircraft engines, airframes" ought to have been included in sub-Section (3) of Section 14 of the IBC from the date the sub-Section came into force, so as to ensure implementation of procedure set forth therein for remedies on insolvency in relation to Aircraft which form the subject matter of these Petitions. Effect of Delay in the MCA Notification 39. A Division Bench of this Court in the Nasa Finelease case, while discussing whether the benefit of a Section of the Act would be applicable, held that the delay in the issue of Rules and Notifications cannot nullify the legislative mandate of the enactment. The delay herein was attributable to the Central Board of Direct Taxes who had failed to issue the necessary notification within time. The Division Bench of this Court held that there....
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..... could not and should not have been notified from April 1, 2006." [Emphasis supplied] 39.1 A challenge to the Nasa Finelease case was dismissed by the Supreme Court on 11.07.2014 SLP(C) No. 017817 / 2014; titled as CIT v M/s Nasa Finelease Pvt. Ltd.. 39.2 As discussed above, India acceded to the Cape Town Convention on 31.03.2008. Subsequently, by the Declaration of Accession dated 31.03.2008, various declarations were made including with respect to Article XXX(I), Article VIII, Article XXX(II) and Article X and the application of "Alternative A" in respect of Article XI in its entirety for all types of insolvency proceedings. Sub-Section (3) of Section 14 of the IBC which provides for exemptions from the application for moratorium as it stood at the time of the enactment of the IBC on 28.05.2016, read as follows: "14. Moratorium- (1).... (2).... (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator." 39.3 Thereafter, in 2019/2020, amendments to sub-Section (3) of Section 14 of the IBC were enacted where certain transactions were excluded from the applic....
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....s case, the Petitioners/Lessors contend that the function of Respondent/DGCA to deregister the Aircraft is merely a "ministerial act" and that the Respondent/DGCA cannot interdict the process of deregistration. 40.2 The Petitioners/Lessors before this Court seek a writ of mandamus against Respondent/DGCA for breach of its duty as prescribed in the Aircraft Act and Rules. It is trite law that the Courts can exercise jurisdiction and give necessary directions where a public authority has failed to exercise its powers. The Supreme Court in Comptroller and Auditor-General of India, Gian Prakash, New Delhi and Anr v. K.S. Jagannathan and Anr (1986) 2 SCC 679 held as follows: "19...... In Halsbury's Laws of England, 4th Edn., vol. I, para 89, it is stated that the purpose of an order of mandamus "is to remedy defects of justice; and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual." 20. There is thus no doubt t....
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.... on record any communication setting forth the deficiencies in the documents filed by the Petitioners/Lessors for deregistration. The Respondent/DGCA is bound to act within the mandate of the Aircraft Act and Aircraft Rules to deregister the Aircraft. 40.6 In view of the aforegoing discussions and since, all the pre-conditions as set forth above stand satisfied, subject to removal by the any deficiencies in the Deregistration Application by Petitioners/Lessors, the deregistration of the 54 Aircraft is to be proceed with by the Respondent/DGCA. Possession of Aircraft with Respondent/Go Air cannot be disturbed 41. Respondent/RP of Go Air has averred that the claim that Respondent/RP of Go Air is for possession and occupation of the Aircraft and under the provisions of Section 14(1)(d) of the IBC, the possession cannot be disturbed during a moratorium. 41.1 Under sub-section (4) of Section 14 of IBC, an order for moratorium has effect from the date of such order till the completion of the CIRP. 41.2 The 54 Aircraft are 'assets' owned by the Petitioners/Lessors which were previously under a contractual agreement i.e., the Lease Agreements, with the Corporate Debtor-Respondent/Go A....
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....greements of the Aircraft had been terminated. The Insolvency Commencement Order was passed after the Lease Agreements were terminated. The termination has remained unchallenged by the Respondent/RP of Go Air. Thus, Respondent/Go Air acting through the Respondent/RP of Go Air, cannot be permitted to retain possession of the Aircraft. Dura lex sed lex - the law must be upheld 42. Respondent/RP of Go Air has argued that deregistration of the Aircraft would lead to the only asset of Respondent/Go Air being taken away from it and thereby leading to corporate death of Respondent/Go Air. This argument, however, fails to recognize that the Aircraft are not assets which are owned or belong to Respondent/Go Air. These Aircraft are owned by the Petitioners/Lessors pursuant to the Lease Agreements entered between Respondent/Go Air and the Petitioner/Lessors. The Petitioners/Lessors before the Court seek a writ of mandamus against the Respondent/DGCA for breaching its duty as prescribed in the Aircraft Act and Rules and are well within their rights to do so. 42.1 Another plea that was raised on behalf of the Respondent/RP of Go Air that deregistration would adversely affect over 4000 employ....
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....a [(2012) 13 SCC 792 : AIR 2013 SC .) [Emphasis supplied] 43.1 It is also to be considered that in view of the delay in deregistration of the Aircraft, India's compliance rating of the Cape Town Convention and Cape Town Protocol has fallen from 3.5 to 2 out of 5, which is a significant drop. These compliance ratings have a long term impact on the Aircraft industry in India and also to Airlines operating in India, including a significant increase in lease rental payments charged by the Petitioners/Lessors. In fact, a chain reaction has been set off which will have a ramification on leasing, for all commercial Airlines in the country. The inconvenience of a specific party cannot outweigh the statutory provisions and the International Treaty obligations which are applicable to these Aircraft. DIRECTIONS 44. In view of the discussions above, the following directions are passed: 44.1 The impugned rejection letters / communications dated 11.05.2023, 12.05.2023 and 19.05.2023 issued by the Respondent/DGCA declining to process the Deregistration Applications of the Petitioners/Lessors are set aside. 44.2 The Respondent/DGCA shall forthwith and no later than the next five working days....
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....MSN 9412VT-WJS Airbus A320-271N MSN 9598 VT-WJT 44.3 All maintenance tasks with respect to the Aircraft as set forth in Paragraph 44.2 hereinabove, shall be undertaken by the Petitioners/Lessors and/or their authorised representatives upto and until the time the Aircraft are deregistered and exported in pursuance of Rule 32A of the Aircraft Rules. 44.4 The Respondent/DGCA and the Respondent/AAI shall aid and assist the Petitioners/Lessors and grant the Petitioners/Lessors their employees, agents, officers and/or authorised representatives access to the Airports, where the Aircraft as set forth in Paragraph 44.2 hereinabove, are parked. 44.5 The Respondent/RP of Go Air and the Respondent/Go Air and its directors, employees, agents, officers and/or representatives are restrained from entering, accessing or in any manner, operating or flying any of the Aircraft, details of which are set forth in Paragraph 44.2 hereinabove. 44.6 The Respondent/RP of Go Air and Respondent/Go Air and its directors, employees, agents, officers and/or representatives are restrained from removing, replacing taking out any accessories, spare-parts, documents, records, materials, etc. of the Aircraft, d....