In a significant judicial intervention aimed at addressing the turmoil surrounding the financially distressed Go First airline, the Delhi High Court took assertive action this Friday. Responding to the ailing carrier’s lessors’ urgent pleas, the court instructed the Directorate General of Civil Aviation (DGCA) to swiftly process requests for the deregistration of an extensive fleet of 54 aircraft. This legal directive seeks to enable these lessors to repossess their aircraft from Go First.
Justice Tara Vitasta Ganju presided over the case and stated unequivocally that the DGCA is to comply with these directives no later than five working days from the order. Laying down a strict timeline, the high court’s mandate aims to bring prompt relief to the aircraft lessors embroiled in Go First’s predicament.
In her pronouncement, Justice Ganju implemented additional protective measures, restraining the resolution professional (RP) – appointed under insolvency law to manage the airline – and the directors of Go First from transferring or concealing planes, associated parts, vital documents, and records. This safeguard acts to prevent any diminishment of the assets which the lessors are entitled to reassume control over.
The judicial direction stipulated that the DGCA, alongside the Airport Authority of India (AAI) and their authorized representatives, shall actively facilitate the lessors in regaining airport access, thereby smoothing out the logistical challenges of reclaiming and exporting the aircraft. The court further granted the lessors permission to export the aircraft in accordance with the applicable rules and laws, ordering the DGCA to aid in this process by providing necessary export certificates and all other pertinent documentation.
This decision resonates not only as a resolute judgment on the lessors’ petitions but also as an admonition to the regulatory bodies and the distressed airline to abide by international norms and practices related to aircraft leasing and insolvency.
The scenario turned contentious as, following the judgment’s delivery, some respondents’ counsel implored the court to suspend its own orders, seeking a week’s respite. However, the judge declined any delay, maintaining the finality of the high court’s decision.
The background of this judicial development dates to when Go First’s lessors initially sought the intervention of the court, beseeching the deregistration of their aircraft to mitigate losses as the airline spiraled into financial duress. The situation for Go First deteriorated further when, on May 10, 2023, the National Company Law Tribunal (NCLT) admitted the airline’s own insolvency resolution petition, subsequently imposing a moratorium that froze the financial liabilities and transfer of assets, thereby putting lessors in a bind.
Caught in legal and financial limbo, the lessors have been unable to reclaim their assets, compelled to brand DGCA’s refusal to deregister the aircraft as “illegitimate.” This group of aggrieved parties includes well-known entities in the aircraft leasing industry, such as Accipiter Investments Aircraft 2 Limited, EOS Aviation 12 (Ireland) Limited, Pembroke Aircraft Leasing 11 Limited, SMBC Aviation Capital Limited, and many others.
The conundrum facing Go First is stark, as the RP appointed by NCLT noted that the repossession of aircraft by lessors could effectively incapacitate an airline already in jeopardy, considering the welfare of its 7,000 employees. Despite this grim forecast, the court has given precedence to the procedural and legal entitlements of the aircraft lessors.
As the carrier ceased operations from May 3, 2023, the current court ruling may help unlock the impasse between Go First and its lessors but leaves uncertain the ultimate fate of the financially ailing airline. With this latest legal verdict, it’s clear that the judiciary is prioritizing not only the enforcement of contracts and agreements but also seeks to send a broader message on the sanctity of international aviation norms during corporate insolvency.
