Go First case: NCLT the only tribunal to adjudicate all IBC disputes, RP tells Delhi HC

The NCLT is likely to start hearing the applications by lessors on December 1

The Resolution Professional (RP) of grounded airline Go First argued at the Delhi High Court that only the National Company Law Tribunal (NCLT) had the power and the bandwidth to adjudicate all the disputes pertaining to Insolvency and Bankruptcy Code (IBC), 2016.

Senior advocate Neeraj Kishan Kaul, who appeared for the RP submitted that as per IBC, all the disputes must first be adjudicated at NCLT and if a party is aggrieved by the tribunal's order, they could file an appeal at National Company Law Appellate Tribunal (NCLAT) and the Supreme Court (SC). According to Kaul, the high court cannot decide a dispute pertaining to insolvency in its writ jurisdiction.

The arguments were made in a bunch of writ petitions filed by the lessors of the Go First against the Director General of Civil Aviation (DGCA) to deregister their aircraft.

Kaul contended that it was because Go First is under moratorium under IBC that the DGCA had put the applications for deregistration on hold and thus only NCLT had the powers to adjudicate the dispute. He further argued that the same set of lessors have moved the NCLT as well and once they have submitted to NCLT's jurisdiction, they could not approach the high court for the same dispute.

According to the RP, the whole process under IBC will be disrupted if the high court starts interfering in such cases. The HC will now hear the case on December 5,6 and 7.

The NCLT is likely to start hearing the applications by lessors on December 1. On November 23, the NCLT extended the Corporate Insolvency Resolution Process (CIRP) of the grounded airline Go First by 90 days.

The 90-day extension commences on November 6 this year and ends on February 4, 2024.  The NCLT directed that the resolution plan be completed within the stipulated period of time. Furthermore, the tribunal dismissed the objections by the airline's lessor for the extension.

The lessors moved a plea in the Delhi HC against the DGCA requesting the court to direct the authority to deregister their aircraft. They argued that the authority should deregister aircraft if demanded by lessors.

On July 5, the High Court, in an interim order, permitted the lessors to inspect and perform maintenance work. However, a division bench of the Delhi High Court on July 12 modified the order to the extent that the lessors could only inspect the aircraft while the insolvency Resolution Professional (RP) appointed under the IBC could carry out maintenance. The Supreme Court upheld the order of the Delhi HC.

As the case progressed, the lessors accused the RP of not maintaining the aircraft and told the court that their assets were at risk of being rendered useless. DAE (SY 22) 13 Ireland alleged that the condition of the aircraft was deteriorating every time it inspected the planes.

DAE, which has leased two aircraft, alleged in its plea that the RP was not giving it access to documents such as maintenance records, which were essential to determine if the planes were being maintained in an airworthy condition.

On October 12, the Delhi High Court permitted the lessors of the grounded airline to engage security personnel to monitor their aircraft engine and other parts. The High Court order said, “A review of the documents and photographs filed by the Petitioners/Lessors show the evident cannibalisation of the Aircraft.”

Meanwhile, the MCA’s notification also raised questions about the status of the leased aircraft.