TaxTMI 
TaxTMI 
2024 (5) TMI 207
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....28/2023, W. P. (C) 9432/2023, W. 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 Respon....
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....te(s) IDERA Date(s) Lease Agreement Termination Date(s) Date of De- 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....
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....IRM VT-WJE 16.11.18 19.12.18 11 W.P.(C) 9900/2023 SKY HIGH XCV LEASING CO. LTD. & ANR v UOI through DGCA Airbus A320 -271N MSN 8583 VT-WJA 12.04.2019 03.05.19 02.05.23 05.05.2023 Airbus A320-271N- MSN 8720 VT-WJG 12.04.2019 15.04.19 Airbus A320-271N MSN 8736 VT-WJH 12.04.2019 03.05.19 Airbus A320-271N MSN 8445 VT-WGU 12.04.2019 22.11.19 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....
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....Application(s) for deregistration of the Aircraft with immediate effect, under Rule 30(7) of the Aircraft Rules, were filed by the Petitioners/Lessors for deregistration of the Aircraft with Respondent/DGCA [hereinafter referred to as "Deregistration Application"] on the dates as set forth in the Table above, along with the requisite documents by each Petitioner/Lessor. 3.9 In the meantime, Respondent/Go Air initiated proceedings before the NCLT, under Section 10 of the Insolvency 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 ....
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....Directors and Ex-Management of the Corporate Applicant/ Corporate Debtor shall extend all necessary support and cooperation to the IRP and his team in keeping the Corporate Applicant/Corporate Debtor as "a going concern" and running its operations/ services smoothly." 3.11 The Insolvency Commencement Order was challenged in an Appeal by the Petitioners/Lessors before the National Company Law Appellate Tribunal [hereinafter referred to as "NCLAT"]. The NCLAT by its order dated 22.05.2023, upheld the order of the NCLT admitting the Petition for insolvency 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. A....
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....he aircrafts, which are designed to prevent cannibalisation and preserve their value and integrity. In our opinion, no severe prejudice would be inflicted upon GoAir in the event the matter is relegated to the learned Single Judge for final disposal of the writ petitions, especially in light of the fact that DGCA would require a minimum of fifteen days to decide on re-commencement of GoAir's flights. We thus deem it appropriate in the interest of justice to refrain from entertaining the appeals at this juncture. The learned Single Judge is however requested to endeavour to decide the writ petitions as expeditiously as possible, preferably on the next scheduled date of hearing. .... 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.....
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....n grounded. It was thus directed that status quo be maintained in respect of handling/non-revenue flights of the Petitioners/Lessors Aircraft in the case of the Petitioners/Lessors in W.P.(C)7369/2023. The relevant extract is reproduced below: "12. The document termed as the "Airbus Manual" (which appears to only be an extract of the complete Airbus Manual) has been relied upon to submit that during the parking period such flights require to be undertaken at intervals of 3 months. This document also does not help the case of the Respondent No. 9/RP, as Paragraph 3 of this document itself contains multiple options qua storage and maintenance. Paragraph 3(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 Ai....
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....at the earliest; (ii) The Respondent/GoAir through RP is permitted to carry out all maintenance tasks of the Aircrafts, their engines and other parts and components with due permissions under law. The Petitioners, its employees, agents, officers and/or representatives shall be permitted to undertake a periodic monthly inspection of all these 5 Aircraft, until final disposal of this Petition; (iii) Respondent/GoAir, its directors, employees, agents, officers and or representatives or the IRP/RP(s) or any person acting on their behalf, are hereby restrained from removing, replacing, taking out any accessories, parts, components or spares, etc. or any relevant operational or other Manuals/records, documentation 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....
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....not being maintained by the Respondent/RP of Go Air as per aviation practices and that it was necessary for the Court to pass urgent directions for inspection of the Aircraft. 10.1 The Petitioners/Lessors had also contended that the Aircraft are sophisticated and highly technical equipment, thus a "walk-around" inspection is not sufficient. Unless the essential Aircraft documents and the Aircraft "part removal" maintenance documents are provided, the inspection would be a futile exercise. It was further contended that there is corrosion on the surface of the Aircraft and algae forming on the body of the Aircraft and that the parts of the Aircraft had also been removed. 10.2 The Applications were opposed by the Respondent/RP of Go Air 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....
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.... the Aircraft as already directed." Contempt Petition [CONT.CAS(C) 1767/2023] 11. The Petitioner/Lessor in W.P.(C) 7663/2023 filed a Contempt Petition (bearing number CONT.CAS(C) 1767/2023) on 30.11.2023 [hereinafter referred to as "Contempt Petition"] wherein it was contended that Respondent/RP of Go Air is not complying with the 05.07.2023 Judgment as amended by the DB Order and the order dated 12.10.2023. It was averred the Aircraft, which form the subject matter of the Petitions pending before this Court, are not being maintained in accordance with the specified guidelines. It was further contended that the monthly inspection as was directed by the Court in the 05.07.2023 Judgement, was not being provided to the Petitioners/Lessors and that Respondent/RP of Go Air is not providing documents relating to the Aircraft to 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 c....
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....ase rental by the Respondent/Go Air which has resulted in the Lease Agreements being terminated by the Petitioners/Lessors on the dates as mentioned in the Table in Paragraph 3.2, hereinabove. This termination of the Lease Agreements was not a result of the voluntary insolvency application, filed by Respondent/Go Air before the NCLT. The Petitioners/Lessors have also submitted that the termination of the Agreements have not been challenged by the Respondent/RP of Go Air. Therefore, as the termination of Lease Agreements and Deregistration Applications were filed prior to the Moratorium as imposed, would not apply to the Petitioners/Lessors. 12.4 The Petitioners/Lessors rely on the Civil Aviation Requirements, issued by the Respondent/DGCA, Section 2, Airworthiness Series F Part I Issue II, dated 10.09.1998 [hereinafter referred to as "Civil Aviation 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 corpora....
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....gment of the NCLAT in Neesa Leisure Ltd through its resolution professional Mr. Amit Jain v. Rajasthan State Industrial & Investment Corporation 2022 SCC OnLine NCLAT 4697, which judgment has been upheld by the Supreme Court Civil Appeal No. 1256/2023 titled as Neesa Leisure Limited v. Rajasthan State Industrial and Investment Corporation, Order dated 04.12.2023. 12.10 It is only in the case of an inconsistency that Section 238 of the IBC prevails, allowing for a harmonious interpretation of seemingly conflicting provisions to be implemented by the Court. Thus, while analysing the overriding effect of the IBC, the Court should not hinder the enforcement of provisions under the Aircraft Act and Rules. This aligns with the Supreme Court's ruling in Municipal Corporation of Greater Mumbai (MCGM) v. Abhilash Lal & Ors (2020) 13 SCC 234, emphasizing that 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 h....
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....013) 10 SCC 765 which has held that hardship or inconvenience of a specific party, shall not bar the Court to uphold and enforce the law. 12.14 The Petitioners/Lessors have also drawn the attention of the Court to the erstwhile Twitter handle, now "X" account of Respondent/Go Air and submitted that the public communication dated 02.05.2023 only mentions that the Respondent/Go Air has decided to suspend operations of Respondent/Go Air due to "serviceable issues/operational issues". There is no mention of any voluntary insolvency proceedings and, therefore, submits that the Petitioners/Lessors could not have, in any circumstances known that the Respondent/Go Air is going to file proceedings under the IBC at the time of sending out its Termination Notices to Respondent/Go Air. Thus, it is contended that the termination could not have, in any circumstance be a result of 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....
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.... the Supreme Court, it was contended that the issue of jurisdiction is required to be decided by this Court in the first instance. 13.2 A combined reading of Sections 13 and 14 of the IBC state that, it shall be the NCLT, which is the authority that is empowered to enforce a moratorium. Therefore, all issues in relation to the same shall be dealt only with the NCLT. The issues raised in the present Writ has also been raised before the NCLT/NCLAT that has been specially crafted with exclusive jurisdiction to adjudicate upon the issues pertaining to insolvency and the corporate entities that are undergoing the CIRP, these pleas cannot be raised again before this Court, seeking similar reliefs. The Petitioners/Lessors having availed their alternative remedy and failed, cannot now approach this Court. There are complicated issues of facts and law that are being gone into by the NCLT, the same 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 jurisd....
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....he Petitioners/Lessors. Arbitrations and other legal proceedings were filed by the Respondent/Go Air against Pratt and Whitney, which also resulted in Awards in favour of Respondent/Go Air but did not translate into any fruitful result for Respondent/Go Air. For the last 3 years, there were no default notices from either of the Petitioner/Lessors. It was after the filing of the abovementioned application for voluntary insolvency that the Petitioners/Lessors sent the Termination Notices. This fact was highlighted before the NCLT and the NCLT was pleased to initiate the insolvency process for the Respondent/Go Air. The Insolvency Commencement Order was then taken in Appeal to the NCLAT and all these facts were again raised before the NCLAT by the Petitioners/Lessors which challenge was dismissed by the NCLAT by its order dated 22.05.2023, which has not been challenged by the Petitioners/Lessors. These facts 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 h....
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....r the Income Tax Act, 1961, it is contended that asset includes "property of any kind", thus Aircraft would also fall in this definition. Reference was made to the judgment of the Supreme Court in the case of Victory Iron Works Ltd. v. Jitendra Lohia & Anr. 2023 SCC Online SC 260 in this regard. 13.13 Even assuming that the terminations are valid, the Aircraft were in possession and occupation of Respondent/Go Air as on the insolvency commencement date. Hence, under Section 14(1)(d) of IBC, the possession of Aircraft is with Respondent/Ro of Go Air and this possession cannot be disturbed during the CIRP. Reliance in this regard was placed on the judgement of the Supreme Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Anr (2020) 13 SCC 208 to submit that the expression "occupied" would be synonymous with actual physical possession in contradistinction to the term possession which would mean either 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 inso....
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....ssors and the Respondent/DGCA exceeds the mandate of the statute. Hence, the MCA Notification cannot be considered to be retrospective. 13.19 As per Section 14(1) of IBC, moratorium is imposed as on the date of insolvency commencement. Hence, the law as on date of insolvency commencement i.e., 10.05.2023 alone ought to considered. Previous interpretation of amendments made to IBC also suggest that the MCA Notification should be given a prospective reading as there is no language implicit in IBC which indicates that deregistration is outside the purview of moratorium, reliance in this regard was made to the judgment of the Supreme Court in the case of Ghanshyam Mishra case and State Bank of India v. Ramakrishnan and Anr. (2018) 17 SCC 394. 13.20 An action by virtue of a delegated legislation cannot be given retrospective applicability and the same is presumed to be prospective in nature, or the same is specifically mentioned in that legislation. Reliance in this regard was made on 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....
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....f the obligation cast on by the signing of the Cape Town Convention which was acceded to by India on 31.03.2008. The MCA Notification under Section 14(3) of the IBC fulfils this obligation. Reliance was placed on Article 253 of the Constitution, which empowers the legislature to make laws for the implementation of treaty or conventions signed with any other country or international body. 14.3 Reliance was placed on the Ramakrishnan case to submit that Section 14(3) of the IBC was in itself retrospective, when it was introduced, and therefore, any notification under this Section shall be construed to be retrospective. Thus, as per the Respondent/UOI and the Respondent/DGCA, the MCA Notification can only be interpreted to be retrospective in nature. 14.4 Reliance was then made on the judgment of the Delhi High Court in the case of CIT v. Nasa Finelease P. Ltd. 2013 SCC OnLine Del 3478, wherein, while interpreting the provisions of the Income Tax Act it was stated that the delay, if any, in the issuance of 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 neces....
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.... by a statutory authority cannot be brought within the fold of "arising out of" or "in relation to" insolvency resolution appearing in Section 60(5) of the IBC. 16.2 A careful perusal of the NCLAT Order dated 24.05.2023, which has granted the parties liberty to file application regarding the applicability of the moratorium is categorically silent about IDERA, as the NCLT and the NCLAT being a creature of the IBC and working in the powers and provisions conferred therein cannot adjudicate upon the IDERA that is a creature of the Cape Town Convention and the Aircraft Act and Rules. 16.3 The interim moratorium application as filed by the Respondent/RP of Go Air was not allowed by the NCLT and was dismissed. Therefore, there was no predicament on the Respondent/DGCA to deregister the Aircraft within 5 days of the filing of the IDERA under the statutory mandate. B. Petitioners went before NCLT for prayers which NCLT could grant. Hence, not barred from approaching this Court 16.4 The Petitioners/Lessors have filed different applications for different cause of actions and remedies in different forums, and is therefore, not forum shopping. A comparison of the pleadings filed be....
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.... relied on by Respondent/RP of Go Air cannot be applicable 16.9 The Petitioners/Lessors are seeking deregistration of the Aircraft rather than recovery of a property. Section 14 of the IBC does not cast any restraint upon this Court to deregister the Aircraft. The Gujarat Urja case is distinguishable as in the Gujarat Urja case, it is specifically stated that only the issues which 'solely' arise out of insolvency are questions which the NCLT has the jurisdiction to decide. It is contended that repeated stress has been given to the words 'solely arising out of insolvency', however, the termination letter issued by the Petitioners/Lessors to the Respondent/RP of Go Air has stated that in addition to the non-payment of longstanding lease rentals and grounding of the Aircraft is a reason for termination of the Lease Agreements and thus, it cannot be said that termination was 'solely' on the ground of insolvency. 16.10 The facts in the Gujarat Urja case were that the Power Purchase Agreement was terminated after the initiation of insolvency proceedings - the insolvency was admitted on 20.11.2018 and the termination notice was issued on 01.05.2019. In addition, the Resolution Profe....
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....ioners/Lessors are only seeking to avail the statutory duties of a Governmental Authority, under the writ of mandamus. Under Rule 30 (7) of the Aircraft Rules, the IDERA of the Petitioners/Lessors is requisite to trigger the deregistration. The Respondent/DGCA has stated on affidavit that the MCA Notification is retrospective in nature being clarificatory, as it clarifies the requirement of having to adhere to treaty obligations and the solemn sovereign promises and any other interpretation would defeat the notification itself which makes a specific reference to the Cape Town Convention. It is also relevant to note that the constitutionality of the MCA Notification has not been challenged in any Court of law. 16.16 The MCA Notification is a subsequent event which must be considered by this Court. Relying on the Kedar Nath Agrawal (dead) and Anr v. Dhanraji Devi (dead) by LRs and Anr (2004) 8 SCC 76, it was contended that, it is the power and duty of a Writ Court to consider the changed circumstances to do complete justice between the parties. 16.17 All the judgments that have been relied upon by the Respondent/RP of Go Air with regard to the MCA Notification state that ....
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....ted for "Alternative A" to "Article XI" for all types of insolvency proceedings. Article XI(2) of the Cape Town Protocol which defines "Insolvency related events", as well, as sets forth that possession of Aircraft shall be given no later than the end of the "waiting period". The waiting period under the Declaration of Accession has been declared as two calendar months. Thus, in the present case, the Petitioners/Lessors contend that, at the very latest, the two-month "waiting period" ended on 03.12.2023, i.e., two calendar months from the date of the MCA Notification and the Aircraft ought to have been deregistered and handed over to the Petitioners/Lessors no later than 03.12.2023. 16.23 It was further contended that accepting the arguments of the Respondent/RP of Go Air would lead to a situation where the obligations under the Cape Town Protocol and Cape Town Convention and the Declaration of Accession under Article XXX(3) of the Cape Town Protocol are to be ignored. Such an interpretation should not be countenanced by this Court. ANALYSIS & FINDINGS: CM APPL. 36850/2023 and connected Applications [Applications for impleadment of CoC] 17. At the outset, this Court dee....
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.... and is bound by the instructions of the CoC. Hence, the CoC is neither a necessary nor a proper party in the present Petitions. 17.5 It is trite that the addition of parties is generally a matter of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case. A necessary party is indispensable, without whom no effective order can be issued. A proper party, on the other hand, is one whose absence does not hinder the issuance of an effective order, but whose presence is vital for a comprehensive and conclusive decision regarding the matter at hand [See: Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay and Ors. (1992) 2 SCC 524]. The Court is required to see if the presence of the CoC is such, that in their absence no effective order can be passed and that their presence is necessary to enable the Court to decide the matter effectively. 17.6 Section 17 read with sub-Sections 1 and 2 of the Section 23 of the IBC states that the management of the affairs of a corporate debtor is vested with the Interim Resolution Professional [hereinafter referred to as "IRP"] or the Resolution Professional/RP and it is the ....
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....C for impleadment accordingly are dismissed. It is clarified that this does not preclude the CoC in any manner, representing its interests before the NCLT or other judicial fora in accordance with law. Registration of Aircraft and its Deregistration 18. As stated in Paragraph 2 above, the grievance of the Petitioners/Lessors essentially stems from the fact that although, the pre-requisites for deregistration under sub-Rule (7) Rule 30 of the Aircraft Rules have been complied with, the Respondent/DGCA has failed to deregister the 54 Aircraft which form the subject matter of these Petitions. 19. The provisions of the Aircraft Act, 1934 and the Aircraft Rules inter-alia provide that no person shall use and operate an Aircraft unless it is in accordance with the Aircraft Rules. 19.1 Rule 5 of the Aircraft Rules provides for the registration etc. of an Aircraft and states that unless an Aircraft has been registered and it bears its nationality and registration marks on the Aircraft, it shall not be flown. Rule 5 of the Aircraft Rules is extracted below: "5. Registration and nationality and registration marks - Subject to the provisions of rule 33, no person shall fl....
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....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). Such registration is not in conformity with the provisions of sub-rule (2); or (ii). The registration has been obtained by furnishing false information; or (iii). The aircraft could more suitably be registered in some other country; or (iv). The lease in respect of the aircraft, registered in pursuance of sub-clause (iv) of clause (a) of sub-rule (2), is not in force; or (v). The certificate of airworthiness in respect of the aircraft has expired for a period of five years or more; or (vi). The aircraft has been destroyed or permanently withdrawn from use; or (vii). It is inexpedient in the public interest that the aircraft should remain registered in India." [Emphasis supplied] 19.4 A combined reading of Rule 5 and Rule 30(6) of the Aircraft Rules shows that unless an Aircraft has an existing registration, it cannot be flown and once the lease of an Aircraft has expired or been terminated, its registration "may" be cancelled at any time. 19.5 The Respondent/DGCA has plac....
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....f the Cape Town Protocol; " 20.2 IDERA is an acronym for an Irrevocable De-Registration and Export Request Authorisation. It operates under Article XIII of the Cape Town Protocol and provides that the Petitioner/Lessor is the sole person entitled to procure the deregistration of the Aircraft by the Respondent/DGCA and to procure and physically export the Aircraft from India. The table in Paragraph 3.2 above, contains the date on which each IDERA has been furnished by Respondent/Go Air to the Petitioners/Lessors. 20.3 Undisputedly, the Petitioners/Lessors in the present case are the IDERA Holders in respect of all 54 Aircraft which form the subject matter of the present Petitions. The IDERA, being almost identical in all the cases, as 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 the Airbus Model A320-271N aircraft bearing manufacturer's serial number 11111 and registration number VT-WDB (together wit....
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....as pronounced/made available to the general public. 21.1 Although, the Deregistration Application were acknowledged by Respondent/DGCA, the process of deregistration did not take place as the Respondent/Go Air had initiated proceedings for voluntary insolvency which led to the Insolvency Commencement Order being passed by the NCLT on 10.05.2023. 21.2 The Petitioners/Lessors, thereafter, received a communication from the Respondent/DGCA on 12.05.2023 (and 19.05.2023) which stated that deregistration request cannot be processed. The communications received were similar to each other, for each of the 54 Aircraft. One such communication extracted from W.P.(C) 7663/2023 is below: "Subject: Request for De-registration of A320 Aircraft; VT-WDA (MSN:110052) under IDERA. Sir/Madam, Reference may please be made to your application regarding subject cited above. I have been directed to convey that in view of the Order dated 10.05.2023 passed by NCLT, New Delhi in Company Petition No. (IB)-264 (PB)/2023, the De-registration request cannot be processed at this stage. This issues with the approval of Competent Authority." [Emphasis supp....
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....y of IDERA and the priority search report. 23. 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. After analysis of the provisions of the Aircraft Rules, the Court in the Awas case, held that the Respondent/DGCA has to proceed in accordance with Rule 30 (7) of the Aircraft Rules which is a mandatory requirement 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. It was held that 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 impinged if the deregistration is granted is not a valid ground for refusal. 23.1 It is apposite to refer to the following extract of the Awas case in this regard below: "21.1 As would be evident upon a careful reading of the proviso to sub-rule (1) that, in case of a leased aircraft, the COR [COR - Certificate of Registration] should include inter alia the factum of the validity of the lease. In the cases under ....
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....minate the lease agreements, would require determination by a competent court of law, and therefore, no relief could be given in the present petitions. This argument, in my view, is misconceived, because it ignores the provisions of Convention and the Protocol, which proceed on documentary evidence vis-a-vis the remedy sought under Article IX of the Protocol. Upon fulfilment of the ingredients set out in Article IX of the Protocol, the petitioners become entitled to the reliefs encapsulated therein. Entitlement to termination of 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 o....
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....f Respondent/Go Air and in terms of Section 60(5) of the IBC, only the NCLT has exclusive jurisdiction to decide the "issues arising out of and in relation to the insolvency" of the Respondent/Go Air. 24.2 It has also been contended by Respondent/RP of Go Air that since termination of the Lease Agreements and Deregistration Applications are all motivated by the insolvency in terms of Section 14(1)(d) of the IBC, the Aircrafts are required to be retained by Respondent/Go Air to enable the Respondent/Go Air to function as a going concern. 25. Sub-Section (4) of Section 14 of the IBC, sets forth that an order for moratorium is effective from the date of such order, till the completion of the CIRP as follows:- "14. Moratorium (1) .... (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium s....
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....rnataka. Prior to the expiry of the lease, the NCLT declared a moratorium under Section 14 of the IBC. The Supreme Court held that the NCLT is not a Civil Court but a creature of a statute. It is apposite to refer to the following extract:- "29. Therefore as rightly contended by the learned Attorney General, the decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain and hence the correctness of the said decision can be called into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action. Judicial review, as observed by this Court in 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 count....
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.... 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). Let us take for instance a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal, at the time of initiation of CIRP. If Section 60(5)(c) of the IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260-A of the Income Tax Act, 1961. Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. [It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate....
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....alm of public law. The scope of Section 63 and Section 231 of the IBC is restricted to matters which the NCLT or the NCLAT have jurisdiction. 26.1 In fact, recognising this limitation, the NCLAT has in a judgment, titled as Canara Bank v. Deccan Chronicle Holdings Limited 2017 SCC OnLine NCLAT 255, while modifying an order passed by the NCLT, held that the power of the Supreme Court and the High Court under Article 32 and 226 of the Constitution, respectively, cannot be curtailed by any provision of an Act or Court and further held that the moratorium would not affect the High Court under Article 226 of the Constitution. The relevant extract is below: "7. There is no provision to file any money suit or suit for recovery before the Hon'ble Supreme Court except under Article 131 of the Constitution of India where dispute between Government of India and one or more States or between the Government of India and any State or States on one side and one or two or more States is filed. Some High Courts have original jurisdiction to entertain the suits, which may include money suit or suit for recovery of money. The Hon'ble Supreme Court has power under Article 32 of the....
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....e ground of jurisdiction of the NCLT/NCLAT to entertain contractual disputes between the parties. A moratorium was imposed by the NCLT and subsequently, a Power Purchase Agreement executed between the parties was terminated on account of default. Relying on the judgement in the Arcelor Mittal case, the Supreme Court held that the Power Purchase Agreement was terminated solely on the ground of insolvency and hence, the proceedings against the corporate debtor are to be governed by Section 60(5) of the IBC, and NCLT/NCLAT alone will have jurisdiction. The Supreme Court held that the purpose of non obstante clause in Section 60(5) of the IBC was to ensure that the NCLT alone has jurisdiction when it comes to applications which are covered by the IBC so that these are not entertained by any other fora. The Supreme Court, however, penned a word of caution in the Gujarat Urja case saying that where the dispute does not arise solely from or relate to insolvency, the legitimate jurisdictions of Courts and Tribunals must not be usurped by NCLT/NCLAT. It is apposite to refer to the following extract of the Gujarat Urja case: "69. The institutional framework under IBC contemplated th....
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....cumscribed by the supervisory role envisaged for it under IBC, which sought to make the process driven by trained resolution professionals. [Emphasis supplied] 27.3 Thus, it was held that disputes which arise solely from or relate to the insolvency of the corporate debtor are to be governed by the NCLT. Where applications are filed under the IBC, "by or against" a corporate debtor and where there is a nexus between the dispute and the insolvency of such corporate debtor, only the NCLT has the power to adjudicate. The NCLT must not however usurp the legitimate proceedings of other Courts. 27.4 On an analysis of the Gujarat Urja case, it is clear that the primary reason for termination of the agreement between the parties in that case was the initiation of insolvency proceedings. Paragraph 71 of the Gujarat Urja case, has held that in the absence of the insolvency of the corporate debtor, there was no ground to terminate the Power Purchase Agreement between the parties. Paragraph 71 is reproduced below: "71. In the present case, PPA was terminated solely on the ground of insolvency, since the event of default contemplated under Article 9.2.1(e) was the commenc....
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....rcelor Mittal case to submit that even antecedent facts proximate to the issue ought to be considered for applicability of the provisions of Section 60(5) of the IBC. However, judgment in the Arcelor Mittal case was in the context of ineligibility of resolution applicants to submit resolution plans after the introduction of Section 29A of the IBC in the year 2017. The Supreme Court while interpreting the Section 29A(c) of the IBC held that a person who wishes to submit a resolution plan must do so acting jointly or in concert with other persons who happen to manage or control the corporate debtor and that care must be taken to ensure that persons who are in-charge of corporate debtor for whom such resolution plan is made do not obtain control of a company without first paying all its debts. It was in this context that the Court held that if at the time of submission of a resolution plan, if there are antecedent facts which are reasonably proximate in time they can always be seen. However, the submission of resolution plan or persons eligible to be a resolution applicant does not form part of the mandate of this Court. This judgment thus, does not come to the aid of the Respondent/R....
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.... of an irrevocable letter of credit (the "Initial Security Deposit Letter of Credit") in an amount equal to (the "Initial Security Deposit LC Amount"); and (ii) no later than three (3) Business Days prior to the Delivery Date, a swift copy of an irrevocable letter of credit (the "Second Security Deposit Letter of Credit", and together with the Initial Security Deposit Letter of Credit, the "Security Deposit Letters of Credit", and each a "Security Deposit Letter of Credit") in an amount equal to (the "Second Security Deposit LC Amount" and together with the Initial Security Deposit LC Amount, the "Combined Security Deposit LC Amount" and each a "Security Deposit LC Amount")..." "..... 5.3(a) Lessee will pay to Lessor or its order the amount calculated pursuant to paragraph (b) below in advance on each Rent Date. Payment must be initiated adequately in advance of each Rent Date to ensure that Lessor receives credit for the payment on the relevant Rent Date. (b) For the purposes of this Agreement, the Rent will be per Rental Period, comprised of: (i) a tranche one lease rental of per Rental Period; and (ii) a tranche two lease ren....
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....mply (or such longer period as is necessary to cure the non-compliance provided the non-compliance is curable and Lessor (acting reasonably) is satisfied that Lessee is using all reasonable endeavours to cure the non-compliance but in any event no longer than forty (40) days); (d) any representation or warranty made (or deemed to be repeated) by Lessee in or pursuant to this Agreement or any other Transaction Document is or proves to have been incorrect in any material respect when made or deemed to be repeated and, if the event giving rise to such breach is in the reasonable opinion of Lessor capable of remedy, such breach continues for twenty-five (25) days of either Lessee or Lessor becoming aware of such breach (or such longer period as is necessary to cure the breach provided the breach is curable and Lessor (acting reasonably) is satisfied that Lessee is using all reasonable endeavours to cure the breach but in any event no longer than forty (40) days); (e) (i) any authorisation required by Lessee to obtain and transfer freely Dollars (or any other relevant currency) out of any relevant country; or (ii) required by Lessee to authorise, or in connect....
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....o or enters into any of the foregoing; or (iv) any liquidator, insolvency professional, trustee in bankruptcy, judicial custodian, statutory manager, compulsory manager, receiver, administrator, examiner or the like is appointed in respect of Lessee, in each case, pursuant to a final non-appealable order of the adjudicating authority, but excluding, in each case, any proceedings for the purposes of any solvent rearrangement, amalgamation or reorganisation, unless during or because of such amalgamation or reorganisation Lessee becomes or is declared insolvent; (i) (i) an administrative or other receiver or manager or administrator is appointed by the appropriate court or tribunal in respect of Lessee or any substantial part of its assets; (iv) Lessee (or any person acting for or on behalf of Lessee) requests the relevant authority in writing to appoint a receiver or manager or administrator; or (v) any attachment, sequestration, distress or execution affects all or a material part of the assets of Lessee and is not discharged within ninety (90) days, and provided that if any action referred to in (i) or (iii) above are taken by a person o....
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....for a period of thirty (30) days from the date of such notice; provided that: (i) no Event of Default shall arise under this paragraph (n) for so long as such charges are being contested in good faith and by appropriate proceedings, an adequate provision has been made and such proceedings do not involve any risk of the detention, interference with use or operation or sale, forfeiture or loss of the Aircraft; and (ii) such thirty (30) day period shall not apply if there is any risk of detention, interference with use or operation or sale, forfeiture or loss of the Aircraft; (o) Lessee fails to redeliver the Aircraft to Lessor on the Expiry Date in the condition provided for in this Agreement for reasons attributable to Lessee; (p) (i) the issuing bank or confirming bank of a Letter of Credit fails to make any payment under a Letter of Credit when due (provided that it shall not be an Event of Default pursuant to this sub-paragraph (i) where Lessee pays to Lessor an equivalent amount in cash or replaces the Letter of Credit with a Letter of Credit from another issuing bank and complying with Appendix 5 Part A (Additional Payment Provisions) in all ....
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....s, leased out the Aircraft to the Respondent/Go Air and this Lease Agreement contained various different events of default with a declaration of insolvency under clause (g) of Appendix 9, being only one of them. 29.5 It is the contention of the Petitioners/Lessors that Respondent/Go Air started defaulting in their lease payment obligations as early as 2020, in some cases. It has been further contended that several default notices were sent to Respondent/Go Air by the Petitioners/Lessors and it is only when the events of default complained about were not cured, that the Termination Notices were sent to Respondent/Go Air. 29.6 A tabular representation of the multiple default notices and the Termination Notices sent out by Petitioners/Lessors to Respondent/Go Air, is set out below: S.No. Petition name and number No. of Aircraft Date of default Notices and emails Date of Termination Notices 1 WP(C) 6569/2023-ACCIPITER INVESTMENTS AIRCRAFT 2 LTD V UOI 1 14.11.22 13.03.23 20.04.23 02.05.2023 2 WP(C) 6626/2023-EOS AVIATION 12 (IRELAND) LTD. Vs. UOI 1 17.03.23 02.05.2023 3 WP(C) 7214/2023-PEMBROKE AIRCRAFT LEASING 11 LTD VS DGC....
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.... 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 "this Agreement" were a reference instead to this Notice. 4. Notice of Default 4.1 We note that: (a) the amount of being the instalment of Rent payable on 7 July 2020 pursuant to the Lease Agreement (as supplemented by the Deferral Letter) was not paid on such date and remains unpaid as at the date of this Notice and this constitutes an Event of Default under Appendix 9 Part A paragraph (a)(i) of the Lease Agreement; and (b) there has been a payment event of default under the Relevant Agreement which remains unpaid as at the date of this Notice and this constitutes an Event of Default under Appendix 9 Part A paragraph (r) of the Relevant Agreement. 4.2 In accordance with Appendix 1 Part B paragraph 10 of the Lease Agreement, an Event of Default is "continuing" until it has been remedied....
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....en 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 of the Lease because Lessee has failed to make payments under the Lease within the prescribed time period following their due date. As of the date hereof, a total amount of comprising US$304,346.46 of Supplemental Rent and of Rent (as detailed further in the table below and, in each case, excluding any amount payable by way of an Unscheduled Amount at the Past Due Rate) is outstanding: Due Date Amount Payment Invoice Reference 15 February 2023 XXXXXX Supplemental Rent 23MD000064 17 February 2023 XXXXXX Rent 23RD000090 (2) a Default has occurred and is continuing under Section 12.1 of the Lease because Lessee has failed to make the below....
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....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 which occurred thereunder) as at the date of this notice or which may become available to Lessor after the date of this notice. 5. No failure or delay on the part of Lessor in exercising any right or remedy shall operate as a waiver or forfeiture thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof. 6. This notice and any non-contractual obligations arising out of or in connection with this notice shall be governed by, and construed in accordance ....
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....he 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 to which the Answering Respondent was unable to make payment of dues to the Petitioner." [Emphasis supplied] 30.3 In fact, Respondent/Go Air had made a similar submission before the NCLT as well, which finds a mention in the Insolvency Commencement Order dated 10.05.2023 and is reproduced below: "7. While explaining the reasons for such defaults, the Ld. Sr. Counsel Mr. Neeraj Kishan Kaul appearing for the Corporate Applicant stated that it has b....
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.... 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 insolvency of corporate debtor. The trajectory of events makes it clear that the alleged breaches noted in the termination notice dated 10-6-2019 were not a smokescreen to terminate the agreement because of the insolvency of corporate debtor. Thus, we are of the view that NCLT does not have any residuary jurisdiction to entertain the present contractual dispute which has arisen dehors the insolv....
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....use 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 the insolvency. The provisions of Section 60(5) of the IBC cannot be deemed to be applicable in the present case. Cape Town Convention vis-à-vis the IBC 32. It has been contended on behalf of Respondent/RP of Go Air that the provisions of the IBC shall prevail over the Aircraft Act and Aircraft Rules in view of the Section 238 of the IBC. On the other hand, it is conte....
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....s 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 envision the creation of charge or securities in respect of MCGM's properties. Nevertheless, the authorities under the Code could not have precluded the control that MCGM undoubtedly has, under law, to deal with its properties and the land in question, which undeniably are public properties. The resolution plan, therefore, would be a serious impediment t....
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....onvention 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, aircraft engines and airframes and helicopters were exempted from an application of moratorium under Section 14(1) of the IBC. 33.1 The MCA Notification being brief is extracted below: "MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 3rd October, 2023 S.O. 4321(E) - WHEREAS, the Convention on....
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....itted 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, delegated legislations do not operate retrospectively, the MCA Notification cannot be retrospective. Reliance was placed on the following extract of judgment of the Supreme Court in the Esthappan Cherian case: "17. Another equally important principle applies : in the absence of expr....
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....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, since the matter is sub-judice, the answering respondents shall await for the appropriate directions from this Hon'ble Court before proceeding in the matter further." [Emphasis supplied] 34.3 Learned ASG appearing on behalf of Responden....
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....ontended 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 are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only - "nova constitutio futuris formam imponere debet non praeteritis" - a new law ought t....
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....ion 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 as sub-Section (3) in Section 14 thereof. Sub-Section (a) of Section 14(3) of the IBC includes transactions, agreements or arrangements....
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....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 use of the aircraft object und....
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....rotocol, wholly or in part. If it so declares with respect to 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 othe....
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....is earlier. Since, insolvency proceedings have already been initiated, this Article does apply. The waiting period as has been set out in the Declaration of Accession is two calendar 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....
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....en the Petitioners/Lessors and Respondent/Go Air. The circumstances surrounding the MCA Notification thus, all point to its retrospectivity. 38.8 Keeping in mind the scope and purview of the Aircraft Act and Rule 30(7) of the Aircraft 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 Notification....
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....fectuate the statutory and the legislative mandate. There is no good ground or reason why the notification in question should not be given effect from April 1, 2006. No reason or ground is alleged or argued to contend that National Stock Exchange India Ltd. 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) shal....
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....terms of Rule 30(7) of the Aircraft Rules. The impugned order/communication of Respondent/DGCA dated 12.05.2023 reproduced in Paragraph 21.2 above states that the deregistration request cannot be processed on account of the Insolvency Commencement Order passed by the NCLT. In view of the judgment in Awas 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 th....
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....al/notarised copy of IDERA and (b) priority search report; (iv) No consent or recourse to any other person including the operator of the aircraft is to be made. 40.5 The Petitioners/Lessors are the IDERA holders in respect of all Aircraft. Indisputably, the Cape Town Convention and Cape Town Protocol apply to these Aircraft. The Respondent/DGCA has not placed 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....
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....However, placing reliance on the judgement of the Supreme Court in the TATA Consultancy case, this Court had already ruled that Section 60(5) of the IBC is not applicable in the circumstances of the present case as the termination does not arise 'solely' on account of the insolvency. In addition, the Respondent/RP of Go Air's claim for possession or occupation of the Aircraft under Section 14(1)(d) of the IBC has been exercised after the Lease Agreements 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 ....
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.... stands attracted in such a situation. It has consistently been held that, "inconvenience is not" a decisive factor to be considered while interpreting a statute. "A result flowing from a statutory provision is never an evil. A court has no power to ignore that provision to relieve what it considers a distress resulting from its operation." (See Martin Burn Ltd. v. Corpn. of Calcutta [AIR 1966 SC 529], AIR p. 535, para 14 and Rohitash Kumar v. Om Prakash Sharma [(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 In....
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....VT-WJD Airbus A320NEO MSN 8650 IRM VT-WJE 11 W.P.(C) 9900/2023 Airbus A320 -271N MSN 8583 VT-WJA Airbus A320-271N- MSN 8720 VT-WJG Airbus A320-271N MSN 8736 VT-WJH Airbus A320-271N MSN 8445 VT-WGU Airbus A320-271N MSN 8757 VT-WJI Airbus A320-271N MSN 8850 VT-WJK 12 W.P.(C) 9901/2023 Airbus A320-271N MSN 9264 VT-WJN Airbus A320-271N MSN 9358 VT-WJP Airbus A320-271N MSN 9375VT-WJQ Airbus A320-271N MSN 8785 VT-WJR 13 W.P.(C)-10327-2023 Airbus A320-271N MSN 8785 VT-WJJ Airbus A320-271N MSN 9200 VT-WJL 14 W.P.(C)-10386-2023 Airbus A320-271N MSN 9218 VT-WJM Airbus A320-271N 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 ac....