New Delhi: Regulator Directorate General of Civil Aviation (DGCA) has told the Delhi high court that it regards the corporate affairs ministry’s changes regarding the recovery of leased aircraft during insolvency as retroactively applicable, a development with huge implications for the revival of Go First airline.
But the regulator said that it would wait for court directives to proceed on the matter.
“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,” the DGCA representative said in response to a writ petition by Ireland-based ACG Aircraft Leasing.
“However, since the matter is sub-judice, the answering respondents shall wait for the appropriate directions from his Hon’ble court before proceeding in the matter further,” DGCA added. The matter is being heard by a single-judge bench of the Delhi high court.
Should the court endorse DGCA’s view, it would necessitate the return of planes to lessors, who are seeking repossession of the aircraft in various courts. This could put a spanner in Go First’s efforts to resume operations utilizing these aircraft.
On 3 October, the ministry of corporate affairs notified that some provisions of the insolvency and bankruptcy code will not be applicable on aircraft, engines and related parts.
“The Central Government hereby notifies that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters,” the ministry of corporate affairs had said in the notification.
Under section 14, the sub-section (1) dictates imposition of moratorium with the admission of insolvency plea of a company. The moratorium prohibits transfer of any asset by a corporate debtor and also bars recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
Since the 3 October notification, lessors for Go First have demanded recovery of aircraft citing the changes. A retrospective implementation of the amendment will help the lessors recover their aircraft as Go First insolvency proceedings are ongoing.
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Updated: 02 Nov 2023, 11:52 PM IST