Go First case: Delhi HC permits lessors to inspect and carry out maintenance of aircraft

Go First Vs Lessors

In a relief to grounded airline Go First's lessors, a single judge of Delhi High Court on July 5 permitted them to inspect and carry out maintenance work of their 30 aircraft and their parts in regular intervals.

The court has asked the Director General of Civil Aviation (DGCA) and the airports where they are parked to permit the lessors to access their aircraft in the next three days.

Justice Tara Vitasta Ganju, who passed the interim order, also restrained Go First's resolution professionals and employees from removing, replacing and taking out any part or component of the leased aircraft without the express permission of the lessors.

The order also notes that aircraft are expensive and complex machinery and require regular maintenance. The cases are likely to come up for a final hearing in August.

On June 1, the Delhi High Court reserved judgment in a batch of petitions filed by lessors of the financially troubled airline Go First, seeking the deregistration of their aircraft.

The Director General of Civil Aviation (DGCA), against whom the plea was filed, argued that they had not rejected any lessor's applications for repossession due to a moratorium. The DGCA further stated that they neither support the lessors nor Go First in the dispute but are obligated to follow the court's orders.

The lawyers for the lessors argued that the relationship between an airline and the aircraft lessor is contractual and that tinkering with the terms of the contract would have consequences for the Indian aviation sector. They further argued that the settled principles of the relationship between the aircraft lessor and the airline cannot be modified without legal sanction.

Go First's Interim Resolution Professional (IRP) argued that the aircraft lessors initiated "parallel proceedings" despite a clear directive from the National Company Law Appellate Tribunal (NCLAT) to approach the National Company Law Tribunal (NCLT) regarding the status of aircraft leases terminated before the moratorium.

Aircraft lessors, including Pembroke Aviation, Accipiter Investments Aircraft 2 Ltd, EOS Aviation, and SMBC Aviation, filed a writ with the Delhi High Court, seeking directions to release the planes leased to the financially distressed airline.

On May 22, the NCLAT upheld the NCLT's order admitting Go First's plea for insolvency.

On May 10, the principal bench of the NCLT in Delhi accepted Go First's voluntary plea to initiate an insolvency resolution process. The tribunal appointed an IRP, suspended the board, and imposed a moratorium on the airline's financial obligations.