Go First in Delhi HC: RP seeks adjournment after aircraft, engines exempted from moratorium

The High Court has now deferred the hearing to October 19

The Resolution Professional (RP) of the grounded airline Go First on October 5 sought an adjournment at the Delhi High Court after the Ministry of Corporate Affairs (MCA) notified that aircraft, engines and airframes are exempted from moratorium under the Insolvency and Bankruptcy Code, 2016.

Senior advocate Neeraj Kishan Kaul, who appeared for the RP told the court that he will have to consult with the Committee of Creditors (CoC) to understand the further course of action in the case.

The High Court has now deferred the hearing to October 19.

During the course of the hearing, the lawyers for the lessors told the court that the case has now become infructuous as the government has clarified their stand on the issue. Furthermore, they urged the court to direct the Director General of Civil Aviation (DGCA) to file an affidavit stating their stand.

Lawyer Anjana Gosain, who appeared for DGCA, told the court that they would abide by any order that the court passes. The court thus deferred the hearing of the case.

The Ministry of Corporate Affairs issued a notification on October 4 stating that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC), would not be applicable to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.

Section 14 of the IBC deals with the power of adjudicating authority (NCLT) to issue a moratorium when admitting a company to the insolvency resolution process. Once a moratorium is imposed, activities such as institution of suits, continuation of pending suits, execution of judgments, transferring/disposing off assets and recovery or enforcement of security interest are prohibited.

As a result of this notification, a moratorium will not include agreements relating to aircraft, aircraft engines, airframes and helicopters. This would mean that aircraft, engine and helicopter leased and other agreements will not be bound by a moratorium.

Go First's lessors have moved both the National Company Law Tribunal (NCLT) and the Delhi High Court. At the NCLT, they have filed a batch of petitions to be exempted from the moratorium as they terminated their leases before the airline was admitted to insolvency.

The lessors have moved a plea in Delhi HC against DGCA asking for the court to direct the authority to deregister their aircraft.

While the NCLT refused to restrain Go First from using the aircraft, the Delhi High Court passed a contrary order.

On July 5, the HC permitted the lessors to inspect and perform maintenance work. However, a division bench of the Delhi HC on July 12 modified the order to the extent that the lessors could only inspect the aircraft while the RP could carry out maintenance.