GY AVIATION LEASE 1722 CO LIMITED & ORS. vs UNION OF INDIA THROUGH THE MINISTRY OF CIVIL AVIATION & ORS.
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 22.03.2024
Judgment pronounced on: 26.04.2024
+ W.P.(C) 6569/2023 & CM APPL. 36850/2023
ACCIPITER INVESTMENTS AIRCRAFT
2 LIMITED ….. Petitioner
versus
UNION OF INDIA & ANR. ….. Respondents
+ W.P.(C) 10327/2023
BLUESKY 31 LEASING COMPANY LIMITED….. Petitioner
versus
DIRECTORATE GENERAL OF CIVIL AVIATION
& ORS. ….. Respondents
+ W.P.(C) 6626/2023 & CM APPL. 36930/2023
EOS AVIATION 12 (IRELAND) LTD. ….. Petitioner
versus
UNION OF INDIA & ANR. ….. Respondents
+ W.P.(C) 7214/2023, CM APPL. 37054/2023 & CM APPL. 36915/2023
PEMBROKE AIRCRAFT LEASING 11 LIMITED… Petitioner
versus
DIRECTORATE GENERAL OF CIVIL AVIATION
& ORS. ….. Respondents
+ W.P.(C) 7369/2023, CM APPL. 36931/2023 & CM APPL. 38321/2023
SMBC AVIATION CAPITAL LIMITED AND
ORS ….. Petitioners
versus
UNION OF INDIA AND ORS ….. Respondents
+ W.P.(C) 7663/2023, CM APPL. 36929/2023
DAE SY 22 13 IRELAND DESIGNATED ACTIVITY
COMPANY ….. Petitioner
versus
UNION OF INDIA AND ORS ….. Respondents
+ W.P.(C) 7773/2023 & CM APPL. 36891/2023
SFV AIRCRAFT HOLDINGS IRE 9 DAC
LIMITED ….. Petitioner
versus
UNION OF INDIA THROUGH THE MINISTRY OF CIVIL AVIATION & ORS. ….. Respondents
+ W.P.(C) 7774/2023 & CM APPL. 36909/2023, 53422/2023
ACG AIRCRAFT LEASING IRELAND LIMITED… Petitioner
versus
UNION OF INDIA & ORS. ….. Respondents
+ W.P.(C) 10386/2023
BLUESKY 19 LEASING COMPANY LIMITED ….. Petitioner
versus
DIRECTORATE GENERAL OF CIVIL AVIATION
& ORS. ….. Respondents
+ W.P.(C) 8088/2023 & CM Appls.36928/2023
GY AVIATION LEASE 1722 CO LIMITED
& ORS …… Petitioners
versus
UNION OF INDIA THROUGH THE MINISTRY OF CIVIL AVIATION & ORS. ….. Respondents
+ W.P.(C) 9432/2023
BOC AVIATION (IRELAND) LIMITED ….. Petitioner
versus
DIRECTORATE GENERAL OF CIVIL AVIATION
AND ORS ….. Respondents
+ W.P.(C) 9594/2023 & CM APPL. 39368/2023
JACKSON SQUARE AVIATION IRELAND
LIMITED ….. Petitioner
versus
DIRECTORATE GENERAL OF CIVIL AVIATION
AND ORS. ….. Respondents
+ W.P.(C) 9900/2023
SKY HIGH XCV LEASING COMPANY LIMITED
& ANR. ….. Petitioners
versus
UNION OF INDIA THROUGH THE MINISTRY OF CIVIL AVIATION & ORS. ….. Respondents
+ W.P.(C) 9901/2023
STAR RISING AVIATION 13 LIMITED ….. Petitioner
versus
UNION OF INDIA THROUGH THE MINISTRY OF CIVIL AVIATION & ORS. ….. Respondents
Advocates who appeared in this case:
For the Petitioners/ Lessors: Mr Mukul Rohtagi, Mr Rajiv Nayyar, Mr. Dayan Krishnan, Mr. Arun Kathpalia, Mr Kevic Setalvad, Mr Satvik Varma, Mr Amit Sibal, Sr. Advocates with Mr. Ravi Nath, Mr. Ankur Mahindro, Mr Nitin Sarin, Mr. Rohan Taneja, Mr. Pranaya Goyal, Mr. Aditya Kapur and Mr. Mehul Jain, Mr Ameya Gokhale, Ms. Meghna Rajadhyaksha, Mr. Vaijayant Paliwal, Ms. Medha Sachdev, Mr. Rishabh Jaisani, Ms. Riay Basu, Mr. Harit Lakhani, Ms. Mehak Nayak, Mr. Ajay Kumar, Mr. Hetram Bishnoi, Ms. Anchal Nanda and Mr. Ambarish Deenadhayalraj, Advs. Ms. Marylou Bilawala, , Mr. Dhruv Khanna, Ms. Sharleen Lobo, Mr. Chiranjivi Sharma, Ms. Priya Desai, Ms. Apoorva Kaushik, Mr. Vasu Gupta, Ms. Saakshi Malpekar, Ms. Nehal Gupta and Mr. Uday Mathur. Mr. Nimish Vakil, Mr. Amit Pai, Ms. Bhavana Duhoon, Mr. Anshul Syal and Mr. Abhiyudaya Vats, Mr Mukul Katyal, Ms Priyam Jinger, Mr. Soumil Gonsalves, Mr. Hetram Bishnoi and Ms. Aanchal Nanda, Advocates.
For the Respondent/DGCA and Respondent/UOI: Mr Vikarmjeet Banerjee and Mr. Chetan Sharma Additional Solicitor General of India with Ms. Anjana Gosain and Ms. Nippun Sharma, Mr Rajesh Gogna, Ms. Avshreya Pratap Singh Rudy, Mr. Amit Acharya, Mr Apurv Karup, with Mr Naveen Kapoor, Law Officer (DGCA).
For the Respondent/RP of Go Airlines: Mr Neeraj Kishan Kaul, Sr. Advocate with Mr. Diwakar Maheshwari, Mr. Pratiksha Mishra, Mr. Vishnu Sriram, Mr. Shreyas Edupugnati, Mr. Pratibha Agarwal and Ms. K. Lakshmi, Advocates.
For the Respondents/Airports Authority of India: Mr. Digvijay Rai, Standing Counsel with Mr. Archit Mishra and Mr. Vivek Gupta, Advocates.
For the Intervenor/CoC: Mr. Gopal Jain, Sr. Advocate with Mr. Dheeraj Nair, Mr. Angad Baxi, Ms. Vishrutyi Sahni and Ms. Stanzin Dolker, Advocate.
TABLE OF CONTENTS
ParaNo
Contents
PG No
1
PREFACE
7
3
FACTUAL MATRIX
7
6
CM APPL. 38321/2023 [Application seeking Urgent Directions]
19
7
CM APPL. 36850/2023 and connected Applications [Applications for impleadment of CoC]
20
8
CM APPL. 36012/2023 and other connected Applications [Application seeking Interim Directions]
21
9
CM APPL. 53422/2023 [Application to bring on record subsequent events and urgent directions] & Notification No. S.O. 4321(E) dated 03.10.2023
22
10
Cannibalisation of the Aircraft parts/Maintenance of Aircraft not being done by Respondent/RP of Go Air
23
11
Contempt Petition [CONT.CAS(C) 1767/2023]
26
12
SUBMISSIONS OF THE PETITIONERS/LESSORS
27
12A
Deregistration is mandatory under Rule 30 (7)
27
12B
Termination not arising out of or as a consequence of Insolvency, hence not barred by the provisions of the IBC
28
12C
Termination not challenged by Respondent/RP of Go Air
29
12D
NCLT has no powers to Deregister an Aircraft Powers can only be exercised by a High Court
29
12E
Condition of Aircraft/Cannibilisation
33
12F
Prayer on directions for export of Aircraft
33
13
SUBMISSIONS OF THE RESPONDENT / RP OF GO AIR
35
13A
This Court lacks jurisdiction to adjudicate- Only NCLT has the power/Issue of maintainability/Jurisdiction is to be decided by this Court
35
13B
The DGCA did not deregister the Aircraft in view of the moratorium imposed by NCLTs order of 10.05.2023. Not a ministerial Act and only NCLT has jurisdiction to decide this issue
36
13C
Nexus between Insolvency and Deregistration notices – The Pratt & Whitney engine failure issue
37
13D
Section 60(5) of the IBC cannot be given a narrow interpretation. The IBC has the widest amplitude to deal with all types of matters and the forum for adjudication is the NCLT and NCLAT
38
13E
IBC is a Special Statute and a complete code Its provisions prevail over other statutes
40
13F
Availability of Alternative Remedy
41
13G
Notification dated 03.10.2023 is not a clarificatory notification – cannot be retrospective
42
13H
Inapplicability of judgments of the Petitioners/Lessors
44
13I
Corporate death of the Airline
44
14
SUBMISSIONS OF THE RESPONDENT/ DGCA & RESPONDENT/UOI
44
14A
The Notification is retrospective a necessary adjunct
45
14B
Letters/notices issued by DGCA in pursuance of NCLT orders of moratorium
46
15
SUBMISSIONS OF THE RESPONDENT/AIRPORTS AUTHORITY OF INDIA
46
16
REJOINDER SUBMISSIONS OF THE PETITIONERS/LESSORS
47
16A
Only the High Court has power to deregister
47
16B
Petitioners went before NCLT for prayers which NCLT could grant. Hence, not barred from approaching this Court
48
16C
Termination not arising out of or in relation to Insolvency
49
16D
Judgments relied on by Respondent/RP of Go Air are not applicable
50
16E
Notification dated 03.10.2023 – Prospective or Retrospective is immaterial
52
16F
International Treaty Obligations Cape Town Convention and Cape Town Protocol
53
17
ANALYSIS & FINDINGS
55
17
CM APPL. 36850/2023 and connected Applications [Applications for impleadment of CoC]
55
18
Registration of Aircraft and its Deregistration
59
24
Jurisdiction of High Court under Article 226 of the Constitution vis-à-vis NCLT/NCLAT – a creature of Statute No power of Judicial Review
71
27
No Nexus between Deregistration and Insolvency
78
29
Breach of Binding Lease Agreements-non-payment of lease rentals
83
31
Applicability of the TATA Consultancy case
101
32
Cape Town Convention vis-à-vis the IBC
104
33
MCA Notification dated 03.10.2023 – Prospective or Retrospective
108
39
Effect of Delay in the MCA Notification
124
40
NCLT has no power to deregister the Aircraft, powers can only be exercised by a High Court
128
41
Possession of Aircraft by Respondent/Go Air cannot be disturbed
130
42
Dura Lex Sed Lex the law must be upheld
133
44
DIRECTIONS
135
CORAM:
HON’BLE MS JUSTICE TARA VITASTA GANJU
JUDGMENT
TARA VITASTA GANJU, J.:
PREFACE:
1. This Judgment shall dispose off the 14 Petitions filed by the Petitioners. The Petitioners/Lessors here are the lessors and owners of Aircraft [hereinafter referred to as Petitioners/Lessors] that have been leased to Go Air (India) Ltd. [hereinafter referred to as Respondent/Go Air] who is being represented before this Court by the Resolution Professional [hereinafter referred to as Respondent/RP of Go Air] appointed by an order of the National Company Law Tribunal, Special Bench, New Delhi [hereinafter referred to as NCLT].
2. The principal grievance of the Petitioners/Lessors as articulated in the present Petitions is that the Respondent/DGCA has failed to deregister their Aircraft(s) in contravention of Sub-Rule (7) of Rule 30 of the Aircraft Rules, 1937 [hereinafter referred to as the Aircraft Rules].
FACTUAL MATRIX:
3. The facts, being similar in all the Petitions, are briefly set forth below:
3.1 Separate Lease Agreements were entered between Respondent/Go Air and the Petitioners/Lessors to lease one or more Aircraft to Respondent/Go Air, on the terms and conditions as set forth therein [hereinafter referred to as the Lease Agreements]. In all, Respondent/Go Air had leased 54 Aircraft from these 14 Petitioners/Lessors for a period of 10 years each commencing on the date as set forth in the table in Paragraph 3.2.
3.2 For ease of reference, relevant details with respect to the Petitioners/Lessors are reproduced below:
S.No.
Petition No. & Case Title
Details of the Aircraft Leased
Lease Agreement
Date(s)
IDERA Date(s)
Lease Agreement Termination Date(s)
Date of De-registration Appl. lodged with DGCA
1
WP(C) 6569/2023- ACCIPITER INVESTMENTS AIRCRAFT 2 LTD V UOI
Airbus A320-214
MSN 5811
IRM VT-GOO
04.10.13
23.02.18
02.05.23
04.05.23
2
WP(C) 6626/2023- EOS AVIATION 12 (IRELAND) LTD. Vs. UOI
AirbusA320-271N
MSN 11111
IRM VT-WDB
08.09.22
03.10.22
02.05.23
03.05.23
3
WP(C) 7214/2023- PEMBROKE AIRCRAFT LEASING 11 LTD VS DGCA AND ORS
Airbus A320NEO
MSN 7858
IRM VT-WGN
02.05.18
04.05.18
02.05.23
03.05.23
4
WP(C) 7369/2023- SMBC AVIATION CAPITAL LIMITED AND ORS Vs. UNION OF
INDIA AND ORS
Airbus A320-214
MSN 5675
IRM VT-GON
24.07.13
25.07.13
02.05.23
[For all Aircraft]
04.05.23 [For all Aircraft]
Airbus A320-271N
MSN 7047
IRM VT-WGA
02.05.16
25.05.16
Airbus A320-271N
MSN 7074
IRM VT-WGB
02.05.16
20.06.16
Airbus A320-271N
MSN 8498
IRM VT-WGY
09.10.18
23.10.18
Airbus A320-214 MSN 5990
IRM VT-GOQ
30.10.18
13.02.14
Airbus A320-271N
MSN 8656
IRM VT-GOP
09.10.18
27.12.18
Airbus A320-214 MSN 5809
IRM VT-WGA
30.09.12
13.03.19
Airbus A320-271N
MSN 7330
IRM VT-WGE
24.01.17
24.01.17
Airbus A320-214 -MSN 6072
IRM VT-GOR
01.05.14
28.12.20
Airbus A320-271N
MSN 7205
IRM VT -WGD
01.12.16
06.12.16
5
WP(C) 7663/2023- DAE SY 22 13 IRELAND DESIGNATED ACTIVITY COMPANY Vs. UOI & ORS
Airbus A320- 271N
MSN 11160
IRM VT -WDD
08.08.22
[for both aircraft]
18.01.23 [for both aircraft]
02.05.23 and 04.05.23
05.05.23
Airbus A320- 271N
MSN 11052 IRM VT -WDA
6
WP(C) 7773/2023- SFV AIRCRAFT HOLDINGS IRE 9 DAC LIMITED Vs. UOI THROUGH DGCA& ORS.
Airbus A320 -271N MSN 11130
IRM VT-WDC
05.08.22
11.10.22
03.05.23
05.05.23
7
WP(C) 7774/2023- ACG AIRCRAFT LEASING IRELAND LIMITED Vs. UNION OF INDIA & ORS.
Airbus A320-271N
MSN 7594
IRM VT-WGI
16.11.17
[For all Aircraft]
26.07.18
02.05.23
04.05.23
Airbus A320-271N MSN 7737
IRM VT-WGJ
01.08.18
Airbus A320-271N MSN 7753
IRM VT-WGK
09.10.18
Airbus A320-271N MSN 7859
IRM VT-WGM
06.09.18
8
WP(C) 8088/2023- GY AVIATION LEASE 1722 CO LIMITED & ORS. Vs. UOI
AirbusA320-271N MSN 7813
IRM VT-WGL
16.11.17
18.10.18 [For all Aircraft]
03.05.23[For all Aircraft]
04.05.23
Airbus A320-271N MSN 8146
IRM VT-WGP
11.05.18
Airbus A320-271N MSN 8152
IRM VT-WGQ
11.05.18
Airbus A320-271N MSN 8209
IRM VT-WGR
17.07.18
Airbus A320-271N MSN 8273
IRM VT-WGS
17.07.18
Airbus A320-271N MSN 8382
IRM VT-WGT
30.08.18
Airbus A320-271N MSN 8458
IRM VT-WGV
11.05.18
Airbus A320-271N MSN 8464
IRM VT-WGW
11.05.18
Airbus A320-271N MSN 8482
IRM VT-WGX
11.05.18
Airbus A320-271N MSN 8503
IRM VT-WGZ
18.10.18
9
W.P.(C) 9432/2023
BOC AVIATION (IRELAND) LIMITED v DGCA
Airbus A320NEO
MSN 9332
IRM T-WJO
21.12.19
24.12.19
02.05.23
03.05.23
10
W.P.(C) 9594/2023
JACKSON SQUARE AVIATION IRELAND
LIMITED v DGCA
Airbus
A320NEO
MSN 7172
IRM VT-WGC
19.07.16
31.10.16
03.05.23
[For all 8 Aircrafts]
04.05.2023
[For all 8 Aircrafts]
Airbus
A320NEO
MSN 7507
IRM VT-WGF
19.07.16
11.09.17
Airbus
A320NEO
MSN 7563
IRM VT-WGG
02.10.17
03.10.17
Airbus
A320NEO
MSN 7571
IRM VT-WGH
02.10.17
03.10.17
Airbus
A320NEO
MSN 8613
IRM VT-WJB
08.11.18
29.11.18
Airbus
A320NEO
MSN 8621
IRM VT-WJC
08.11.18
19.12.18
Airbus
A320NEO
MSN 8643
IRM VT-WJD
08.11.18
19.12.18
Airbus
A320NEO
MSN 8650
IRM VT-WJE
16.11.18
19.12.18
11
W.P.(C) 9900/2023
SKY HIGH XCV LEASING CO. LTD. & ANR v UOI through DGCA
Airbus A320 -271N MSN 8583 VT-WJA
12.04.2019
03.05.19
02.05.23
05.05.2023
Airbus A320-
271N- MSN 8720 VT-WJG
12.04.2019
15.04.19
Airbus A320-
271N MSN 8736 VT-WJH
12.04.2019
03.05.19
Airbus A320-
271N MSN 8445 VT-WGU
12.04.2019
22.11.19
Airbus A320-
271N MSN 8757 VT-WJI
12.04.2019
04.07.19
Airbus A320-
271N MSN 8850 VT-WJK
12.04.2019
31.05.19
12
W.P.(C) 9901/2023
STAR RISING AVIATION 13 LIMITED v UOI through DGCA
Airbus A320-271N MSN 9264 VT-WJN
14.10.2019
14.10.19
03.05.23
09.05.2023
Airbus A320-
271N MSN 9358 VT-WJP
14.10.2019
07.11.19
Airbus A320-
271N MSN 9375 VT-WJQ
14.10.2019
18.11.19
Airbus A320-
271N MSN 8785 VT-WJR
09.12.2019
10.12.19
13
W.P.(C)-10327-2023
BLUESKY 31 LEASING
COMPANY LIMITED V DGCA
Airbus A320-
271N MSN 8785 VT-WJJ
27.09.2019
27.09.2019
04.05.2023
10.05.2023
Airbus A320-
271N MSN 9200 VT-WJL
14
W.P.(C)-10386-2023
BLUESKY 19 LEASING
COMPANY LIMITED v DGCA
Airbus A320-
271N MSN 9218 VT-WJM
27.09.2019 (Notation and amendment agreement on 18.06.20)
10.07.2020
04.05.2023
10.05.2023
Airbus A320-
271N MSN 9412 VT-WJS
Airbus A320-
271N MSN 9598 VT-WJT
3.3 Pursuant to the execution of the Lease Agreements, Respondent/Go Air also executed and submitted before Respondent/DGCA, an Irrevocable De-Registration and Export Request Authorisation [hereinafter referred to as IDERA] for each Aircraft, on dates as mentioned in the Table hereinabove.
3.4 The IDERA, is defined in Rule 3(28A) of the Aircraft Rules and it is explained, has come into play in pursuance of the adoption of the Convention of International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment [hereinafter referred to as Cape Town Convention] and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment [hereinafter referred to as Cape Town Protocol]. India acceded to the Cape Town Convention and Cape Town Protocol on 31.03.2008.
3.5 It is contended by the Petitioners/Lessors that in consonance with the Cape Town Convention and the Aircraft Rules, subject to the fulfilment of the provisions of sub-Rule (7) of Rule 30 of the Aircraft Rules, the registration authority, in this case, Respondent/DGCA, does not require the consent of the lessee prior to deregistration and export of an Aircraft.
3.6 Owing to defaults in payment of lease rental amounts under the Lease Agreements by Respondent/Go Air, the Petitioners/Lessors sent individual notices of default to Respondent/Go Air, inter-alia, requesting payment of arrears in lease rental due to them. Since the complete payment was not received by the Petitioners/Lessors, the Lease Agreements qua all 54 Aircraft were terminated by the Petitioners/Lessors on various dates, between 02.05.2023 and 04.05.2023, as set forth in the Table in Paragraph 3.2 above.
3.7 The notice of default and termination sent by the Petitioners/Lessors to Respondent/Go Air [hereinafter referred to as Termination Notice] inter-alia stated that Respondent/Go Air was to immediately cease operation of the Aircraft; and the Petitioners/Lessors were assuming possession of the Aircraft. The Termination Notice further directed the lessee to provide the necessary assistance and cooperation for deregistration and export of Aircraft.
3.8 As a necessary corollary to the Termination Notice, Application(s) for deregistration of the Aircraft with immediate effect, under Rule 30(7) of the Aircraft Rules, were filed by the Petitioners/Lessors for deregistration of the Aircraft with Respondent/DGCA [hereinafter referred to as Deregistration Application] on the dates as set forth in the Table above, along with the requisite documents by each Petitioner/Lessor.
3.9 In the meantime, Respondent/Go Air initiated proceedings before the NCLT, under Section 10 of the Insolvency and Bankruptcy Code, 2016 [hereinafter referred to as IBC] for initiation of voluntary Corporate Insolvency Resolution Process [hereinafter referred to as CIRP].
3.10 By its order dated 10.05.2023 [hereinafter referred to as Insolvency Commencement Order], the NCLT admitted the Petition filed by Respondent/Go Air and as a consequence of which, a moratorium was imposed under Sub-Section (1) of Section 14 of the IBC qua Respondent/Go Air. The relevant extract of this order is below:
48. Hence, in view of the unpaid debt subsisting above Rs. 01 Crore and the default committed by the Corporate Applicant towards the same, and the Corporate Applicant being not disqualified under Section 11 of IBC 2016, we have no other option but to admit the present Application under Section 10 of IBC 2016. Accordingly, the Application of the Corporate Applicant is admitted. As a necessary consequence, the moratorium in terms of Section 14(1) (a), (b), (c) & (d) is declared, and the following prohibitions are imposed:
“(a) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including the execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) Transferring, encumbering, alienating, or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;
(c) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Corporate Debtor.”
49. As proposed by the Corporate Applicant, this Bench appoints Mr. Abhilash Lal as IRP having IBBI Registration IBBI/IPA-001 /IPP00344/2017-2018/ 10645 (Email: abhilash.lal@gmail.com) subject to the condition that no disciplinary proceeding is pending against the IRP so named and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week of this order. This Adjudicating authority orders that:
(a) Mr. Abhilash Lal (Email: abhilash.lal@gmail.com) as IRP having IBBI Registration IBBI/IPA-00l/IP-P00344/2017-2018/10645 is directed to take charge of the CIRP of the Corporate Debtor with immediate effect. The IRP is directed to take the steps as mandated under the IBC specifically under Sections 15, 17, 18, 20, and 21 of IBC, 2016.
(b) The IRP will ensure to take all necessary steps including the execution of the Arbitral Award to keep the Corporate Debtor as a going concern and run its services smoothly.
(c) The IRP also shall ensure that retrenchment of employees is not resorted to as a matter of course. In any event, any such decision/ event should be brought to the attention of this Adjudicating Authority.
50. It is further ordered that the Suspended Board of Directors and Ex-Management of the Corporate Applicant/ Corporate Debtor shall extend all necessary support and cooperation to the IRP and his team in keeping the Corporate Applicant/Corporate Debtor as “a going concern” and running its operations/ services smoothly.
3.11 The Insolvency Commencement Order was challenged in an Appeal by the Petitioners/Lessors before the National Company Law Appellate Tribunal [hereinafter referred to as NCLAT]. The NCLAT by its order dated 22.05.2023, upheld the order of the NCLT admitting the Petition for insolvency filed by Respondent/GoAir and the declaration of a moratorium on 10.05.2023. However, NCLAT directed that the NCLT adjudicate the claims of the Petitioners/Lessors and Respondent/RP of Go Air in relation to the applicability of moratorium on the Aircraft.
3.12 This Court is informed that these proceedings before the NCLT are still pending.
3.13 In the meantime, by letters/orders dated 11.05.2023 and 12.05.2023, the Petitioners/Lessors were informed by Respondent/DGCA that the Deregistration Application(s) have been rejected/application(s) cannot be processed in view of the Insolvency Commencement Order passed by the NCLT. Aggrieved, the present Petitions have been filed.
4. This Court by its common Judgment dated 05.07.2023 [hereinafter referred to as 05.07.2023 Judgment] decided the interim applications seeking maintenance of the Aircraft as filed by 8 Petitioners/Lessors (who were parties at that time). The following directions were passed:
20.1 Therefore, with a view to obviate any further losses, the following directions are being passed:
(i) The Petitioners, their employees, agents, officers and/or representatives shall be permitted by the Respondent/DGCA and the appropriate Airport Authorities to access the Airport(s) where the 30 Aircrafts are parked [details of the Aircraft(s) is reproduced in the table in paragraph 3.2 herein] inter alia to inspect their respective Aircrafts, within the next 3 days;
(ii) The Petitioners, their employees, agents, officers and/or representatives shall be permitted to carry out inspection and all maintenance tasks of the Aircraft, its engines and other parts and components, of all 30 Aircrafts [as are set forth in table at paragraph 3.2 herein], at least twice every month, until the final disposal of the Writ Petitions;
(iii) Respondent/GoAir, its directors, employees, agents, officers and or representatives or the IRP/RP(s) or any person acting on their behalf, are hereby restrained from removing, replacing, taking out any accessories, parts, components or spares, etc. or any relevant operational or other Manuals /records, documentation from any of the 30 Aircraft, except with prior written approval of the Lessor of such Aircraft;
(iv) The following additional directions shall be applicable to Aircraft MSN 6072:
Respondent/DGCA shall permit the Respondent/RP to carry out the mandatory maintenance/engine runs of this Aircraft until its de-registration.
4.1 Aggrieved with the 05.07.2023 Judgment, Respondent/RP of Go Air, filed an Appeal before the Division Bench of this Court. The Division Bench declined to interfere with these directions except for a minor modification to Paragraph 20.1(ii) of the 05.07.2023 Judgment. Reliance is placed on the following Paragraphs of the Division Bench order dated 12.07.2023 [hereinafter referred to as DB Order] which is reproduced below:-
14. The impugned interim directives primarily pertain to the inspection and maintenance of the aircrafts, which are designed to prevent cannibalisation and preserve their value and integrity. In our opinion, no severe prejudice would be inflicted upon GoAir in the event the matter is relegated to the learned Single Judge for final disposal of the writ petitions, especially in light of the fact that DGCA would require a minimum of fifteen days to decide on re-commencement of GoAirs flights. We thus deem it appropriate in the interest of justice to refrain from entertaining the appeals at this juncture. The learned Single Judge is however requested to endeavour to decide the writ petitions as expeditiously as possible, preferably on the next scheduled date of hearing.
.
16. In the meantime, direction (ii) contained in paragraph No. 20.1 of the impugned judgement is modified to the extent that GoAir, through RP, is permitted to carry out all maintenance tasks of the thirty subject aircrafts, their engines and other parts and components, which are parked at various airports, with due permissions mandated under extant rules/ law. The Lessors are also free to carry out periodic monthly inspections of the aforesaid aircrafts in accordance with law.
[Emphasis supplied]
4.2 The DB Order was then challenged by Respondent/RP of Go Air before the Supreme Court. The Supreme Court by its order dated 07.08.2023, dismissed the appeal as filed by the Respondent/RP of Go Air, directing that the jurisdictional issue raised in the appeal can be raised in the proceedings before this Court. The relevant extract is below:
1. Proceedings under Article 226 of the Constitution are pending before a Single Judge of the High Court of Delhi. The petitions are being argued on a day to day basis. The jurisdictional issues which are sought to be raised in these proceedings can be addressed before the High Court.
2. The Special Leave Petitions are dismissed
.
5. Although, final arguments in this matter commenced on 03.08.2023, given the fact that the parties appearing before the Court filed multiple Applications including for interim relief to prevent the flying of the Aircraft; seeking directions for protection of and to prevent the cannibalisation of the Aircraft and, thereafter, a Contempt Petition in view of the fact that the Respondent/RP of Go Air was not complying with the directions of this Court; the hearing has spanned over several months. These Applications were decided at various stages during the course of final hearing and have been enunciated below to complete the factual matrix.
CM APPL.38321/2023 [Application seeking Urgent Directions]
6. CM Appl. 38321/2023, was filed by the Petitioners/Lessors in W.P.(C)7369/2023 on 27.07.2023, stating that Respondent/RP of Go Air had operated and had flown two Aircraft for more than 30 minutes on 25.07.2023 and 28.07.2023, stating them to be handling flights, which were required for the maintenance and airworthiness of the Aircraft. The Petitioners/Lessors were alerted regarding such operation by the aid of the Flight Radar 24 Application.
6.1 This Court by its order dated 28.07.2023, held that since the Lease Agreements had been terminated and had the process of deregistration of the Aircraft had commenced, flying of the Aircraft would be contrary to the provisions of the Aircraft Act and Rules. Relying on Paragraph 3(A)(4) of the Airbus Manual, it was held a maintenance/handling flight is requisite once in every two years during its storage period and undisputedly the period of two years has not passed since the Aircraft have been grounded. It was thus directed that status quo be maintained in respect of handling/non-revenue flights of the Petitioners/Lessors Aircraft in the case of the Petitioners/Lessors in W.P.(C)7369/2023. The relevant extract is reproduced below:
12. The document termed as the Airbus Manual (which appears to only be an extract of the complete Airbus Manual) has been relied upon to submit that during the parking period such flights require to be undertaken at intervals of 3 months. This document also does not help the case of the Respondent No.9/RP, as Paragraph 3 of this document itself contains multiple options qua storage and maintenance. Paragraph 3(A)(4) also states that a maintenance/handling flight is requisite every two years, during a storage period, so that the Aircraft is preserved. It cannot be disputed by the either party that these Aircrafts have not been grounded for two years. Therefore, reliance placed on the Airbus Manual extract, as has been done by the Respondent No.9 /RP of Go Airlines, cannot be accepted either.
13. Thus, the contention of the Respondent No.9/RP of Go Airlines, that the reason, 2 of the 10 Aircrafts have been flown by Go Airlines is that these were handling flights forming part of the scheduled maintenance activity for the Aircraft, is misconceived.
14. The Respondent No.9/RP of Go Airlines has also not been able to show any urgency or any grave imminent threat to these Aircrafts to suddenly and without any prior notice, compel the Respondent No.9/RP of Go Airlines to fly these Aircrafts. Prima facie, the term scheduled maintenance cannot be understood to include flying the Aircrafts even if it is a non-commercial flight. Thus, Respondent No.9/RP of Go Airlines cannot be permitted at this stage, to continue with these handling/maintenance flights.
15. In view of the foregoing discussion, let status quo be maintained in respect of handling/non-revenue flights of the Petitioners Aircrafts [as reproduced in paragraph 7.1 hereinabove] till the next date of hearing.
CM APPL. 36850/2023 and connected Applications [Applications for impleadment of CoC]
7. Applications were filed on behalf of the Committee of Creditors [hereinafter referred to as CoC] as appointed for Respondent/Go Air seeking impleadment of the CoC in the present Petitions, stating that the implementation of the any decision taken by this Court in the present Petitions may adversely affect the CoC and would thus, prejudice the CoCs ability to take independent autonomous decisions to ensure that the corporate debtor i.e., Respondent/Go Air remains a going concern. These Applications have been decided hereinafter.
CM APPL. 36012/2023 in W.P.(C) 9432/2023 and other connected Applications [Application seeking interim directions]
8. The Petitioners/Lessors in W.P.(C) 9432/2023, W.P.(C) 9594/2023, W.P.(C) 9900/2023, W.P.(C) 9901/2023, W.P.(C) 10327/2023 and W.P.(C) 10386/2023 had also approached the Court seeking parity with the 05.07.2023 Judgment (as modified by the DB Order). This Court by its orders dated 21.07.2023, 27.07.2023 and 04.09.2023 passed the following directions:
6. In view of the submissions of the parties, the following directions are passed:
(i) The Petitioners, its employees, agents, officers and/or representatives shall be permitted by the Respondent/DGCA and the appropriate Airport Authorities to access the Airport(s) where the 5 Aircrafts [details of which is reproduced in the table at paragraph 2 above] inter alia to inspect these 5 Aircraft, at the earliest;
(ii) The Respondent/GoAir through RP is permitted to carry out all maintenance tasks of the Aircrafts, their engines and other parts and components with due permissions under law. The Petitioners, its employees, agents, officers and/or representatives shall be permitted to undertake a periodic monthly inspection of all these 5 Aircraft, until final disposal of this Petition;
(iii) Respondent/GoAir, its directors, employees, agents, officers and or representatives or the IRP/RP(s) or any person acting on their behalf, are hereby restrained from removing, replacing, taking out any accessories, parts, components or spares, etc. or any relevant operational or other Manuals/records, documentation the Aircrafts, except with prior written approval of the Petitioners;
CM APPL.53422/2023 [Application to bring on record subsequent events and urgent directions] & Notification No. S.O. 4321(E) dated 03.10.2023
9. On 03.10.2023, the Ministry of Corporate Affairs issued a notification under Section 14(3) of the IBC [hereinafter referred to as the MCA Notification] wherein aircraft, aircraft engines and airframes were kept outside the purview of the IBC. The MCA Notification declared that the provisions in relation to moratorium as set forth under Section 14 of the IBC shall not apply to agreement governed by the Cape Town Convention and Cape Town Protocol.
9.1 Subsequently, the Petitioner/Lessor in W.P.(C) 7774/2023, filed an Application bearing number CM APPL. 53422/2023 to place on record the MCA Notification and averred that in view of the MCA Notification, it is incumbent on Respondent/DGCA to deregister the Aircraft in accordance with the Aircraft Rules. It was contended by the Petitioners/Lessors that they were constrained to approach this Court in view of the fact that the Respondent/DGCA has failed to deregister the Aircraft and now that the MCA Notification has excluded aircraft/aircraft engines/airframes from applicability of the provisions of IBC, the Petitions filed by the Petitioners/Lessors now need to be allowed by this Court with directions to the Respondent/DGCA to deregister the Aircraft.
9.2 Respondent/RP of Go Air vehemently opposed this Application. It was stated that NCLT alone has the jurisdiction to interpret the MCA Notification and that moratorium can only be ended by the procedure prescribed for in the IBC. In addition, the MCA Notification will not do away with the vested rights of the corporate debtors under the IBC to seek resolution as a resumption plan for revival of the corporate debtor has already been approved. It was further contended that the MCA Notification did not apply to the present Petition as it did not have retrospective effect as do notifications of such nature as it has been passed as a delegated legislation and as it is not clarificatory, can only be prospective and not retrospective in its application.
9.3 In response to the Application, Respondent/DGCA filed an Affidavit dated 01.11.2023, wherein it was stated that the MCA Notification is to be construed to have a retrospective effect because the same is clarificatory in nature.
9.4 In view of the fact that final arguments were being heard, this Court by its order dated 10.11.2023 directed that the issue qua the effect of the MCA Notification will be decided along with the main Petition.
Cannibalisation of the Aircraft parts/Maintenance of Aircraft not being done by Respondent/RP of Go Air
10. On 04.09.2023, several Petitioners/Lessors filed applications contending that the Aircraft were not being maintained by the Respondent/RP of Go Air as per aviation practices and that it was necessary for the Court to pass urgent directions for inspection of the Aircraft.
10.1 The Petitioners/Lessors had also contended that the Aircraft are sophisticated and highly technical equipment, thus a walk-around inspection is not sufficient. Unless the essential Aircraft documents and the Aircraft part removal maintenance documents are provided, the inspection would be a futile exercise. It was further contended that there is corrosion on the surface of the Aircraft and algae forming on the body of the Aircraft and that the parts of the Aircraft had also been removed.
10.2 The Applications were opposed by the Respondent/RP of Go Air and once again it was contended that only the NCLT had jurisdiction to decide on the assets of the corporate debtors and not this Court. It was further submitted that similar prayers had been made by the Petitioners/Lessors before the NCLT and that the Petitioners/Lessors are forum shopping.
10.3 With a view to protect the Aircraft and to prevent further cannibalisation, this Court by its judgment dated 12.10.2023 passed directions to maintain and observe the integrity of the Aircraft. The relevant extract is reproduced below:
18. It is clear from the aforesaid discussion that the term Aircraft includes Aircraft Documents, the inspection granted to the Petitioners/Lessors would necessarily have to include Aircraft Documents to facilitate and make the inspection of the Aircraft meaningful.
19. In any event, it has now been more than five months, since the Aircraft were grounded by the Respondent/RP of GoAir. A review of the documents and photographs filed by the Petitioners/Lessors show the evident cannibalization of the Aircraft. The Petitioners/Lessors have made out a prima facie case and it has become necessary for this Court to pass additional directions to protect these highly valuable equipment during the pendency of the present case.
19.1 It is also deemed necessary that the Petitioners/Lessors be permitted to contract a 24 hour security services for all the Aircraft, to be provided at the expense of the Petitioners/Lessors.
20. In view of the aforegoing discussions, the following directions are passed :
20.1 The Respondent/RP of Go Air shall within the next fourteen days provide access to the Petitioners/Lessors of the following documentation in relation to the Aircraft, the Airframe, its engines and other parts and components:
(a) Records pertaining to removal of all parts and components including engines, Air Frame, etc;
(b) Records relating to the storage of the Aircraft;
(c) Historical records and hardcopy records in relation to the Aircraft which may be located at a storage facility including any online records;
(d) Updated technical records, Aircraft status documents and statements in relation to the Aircraft;
(e) Any other document or record as required to ascertain the airworthiness of the Aircraft, its engine(s), the Airframe and all parts and components of the Aircraft.
20.2 The Petitioners/Lessors are permitted to contract a 24 hour security service for all the Aircrafts at their own expense. Respondent No.3/DGCA shall permit, the duly verified security personnel/security agency so appointed by the Petitioners/Lessors, access at the various airports in and around the country, where the Aircraft are lying parked.
20.3 The Respondent/RP of Go Air shall continue to maintain the Aircraft as already directed.
Contempt Petition [CONT.CAS(C) 1767/2023]
11. The Petitioner/Lessor in W.P.(C) 7663/2023 filed a Contempt Petition (bearing number CONT.CAS(C) 1767/2023) on 30.11.2023 [hereinafter referred to as Contempt Petition] wherein it was contended that Respondent/RP of Go Air is not complying with the 05.07.2023 Judgment as amended by the DB Order and the order dated 12.10.2023. It was averred the Aircraft, which form the subject matter of the Petitions pending before this Court, are not being maintained in accordance with the specified guidelines. It was further contended that the monthly inspection as was directed by the Court in the 05.07.2023 Judgement, was not being provided to the Petitioners/Lessors and that Respondent/RP of Go Air is not providing documents relating to the Aircraft to the Petitioners/Lessors.
11.1 The Respondent/RP of Go Air, on the other hand, stated that there has been no willful disobedience of the judgments and orders of this Court, but that the Respondent/RP of Go Air has been taking all the steps to effectuate such compliance. However, due to circumstances outside the control of the Respondent/RP of Go Air, the compliance of the orders passed by this Court and the Division Bench of this Court could not be done.
11.2 By an order of this Court dated 07.03.2024, notice was issued against Respondent/RP of Go Air to show cause as to why contempt proceedings be not issued against Respondent/RP of Go Air for non-compliance of the orders of this Court. No reply was filed by Respondent/RP of Go Air, on the date the judgment in this matter was reserved by this Court.
SUBMISSIONS OF THE PETITIONERS/LESSORS:
12. Learned Counsels appearing on behalf of the Petitioners/Lessors, made the submissions which have been set out below, in brief:
A. Deregistration is mandatory under Rule 30 (7)
12.1 The Petitioners/Lessors aver that Rule 30(7) of the Aircraft Rules, is clear. It is mandatory for the Respondent/DGCA to deregister the Aircraft if the requisite documentation as enlisted therein and the IDERA, is provided to the Respondent/DGCA. There is no discretion with the Respondent/DGCA for deregistration of an Aircraft, nor is consent required from the Respondent/Go Air. The act is a ministerial act to be exercised by Respondent/DGCA. In any event, the Respondent/DGCA cannot keep the Deregistration Applications in abeyance as has been done and such act of the Respondent/DGCA is arbitrary and amenable to exercise of jurisdiction by this Court.
12.2 The legislative intent behind the use of the word may in Rule 30(6) of the Aircraft Rules and shall in Rule 30(7) of the Aircraft Rules shows that Rule 30(7) is a mandatory obligation of Respondent/DGCA to deregister the Aircraft within a period of 5 days from the date of receipt of a Deregistration Application. The Respondent/DGCA is in breach of its administrative duty under Cape Town Convention and the Cape Town Protocol as well. Reliance was placed on the judgment in the Awas 39423 Ireland Ltd. & Ors. v. Directorate General of Civil Aviation & Anr.1, to submit that the act of deregistration is a ministerial act which is to be carried out by the Respondent/DGCA under the provisions of the Aircraft Rules, mandatorily.
B. Termination not arising out of or as a consequence of Insolvency, hence not barred by the provisions of the IBC
12.3 It was further averred by the Petitioners/Lessors that the termination of the Lease Agreements was on account of the continuous defaults in payment of lease rental by the Respondent/Go Air which has resulted in the Lease Agreements being terminated by the Petitioners/Lessors on the dates as mentioned in the Table in Paragraph 3.2, hereinabove. This termination of the Lease Agreements was not a result of the voluntary insolvency application, filed by Respondent/Go Air before the NCLT. The Petitioners/Lessors have also submitted that the termination of the Agreements have not been challenged by the Respondent/RP of Go Air. Therefore, as the termination of Lease Agreements and Deregistration Applications were filed prior to the Moratorium as imposed, would not apply to the Petitioners/Lessors.
12.4 The Petitioners/Lessors rely on the Civil Aviation Requirements, issued by the Respondent/DGCA, Section 2, Airworthiness Series F Part I Issue II, dated 10.09.1998 [hereinafter referred to as Civil Aviation Manual] Clause no 7.6, to submit that for an Aircraft to be air-worthy requires a valid and subsisting Lease Agreement which is not available in the present case.
12.5 Section 14(1)(d) of the IBC prohibits the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, during the period of moratorium. However, in this case, the property, i.e., the Aircraft are neither occupied and nor in constructive possession of the Respondent/Go Air. Relying on Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors2; it has been submitted that the term possession contemplated in Section 14(1)(d) of the IBC must necessarily mean lawful possession.
C. Termination not challenged by Respondent/RP of Go Air
12.6 The legality of the Termination Notice is not a subject matter of the present Petition and the Respondent/RP of Go Air has not challenged the Termination Notice in any Court of law. In any event, a challenge to the Termination Notice(s) would be subject to the jurisdiction of the Courts in England in terms of the Lease Agreement.
D. NCLT has no powers to Deregister an Aircraft Powers can only be exercised by a High Court
12.7 The present Petitions seek a Writ of mandamus from this Court and are maintainable as the Petitioners/Lessors seek judicial review upon a failure of a statutory body to perform its functions/statutory duty under Article 226 of the Constitution of India, 1950 [hereinafter referred to as the Constitution]. The NCLT, on the other hand, does not have any powers in adjudicating and granting the prayers of deregistration of the Aircraft. The NCLT is not a civil Court but a statutory body constituted under the provisions of Sections 408 of the Companies Act, 2013 and can exercise only such powers within the defined boundaries of jurisdiction as outlined by the statute. Seeking judicial review of governmental decisions, such as those made by the Respondent/DGCA, extends beyond the scope of the IBC and necessitates that Writ Court jurisdiction be invoked.
12.8 It has also been argued that the Petitioners/Lessors arent seeking recovery of money from the corporate debtor, but are seeking deregistration under a separate statue, i.e., the Aircraft Act and Aircraft Rules thereunder. The Petitioners/Lessors, in unison, therefore, rely on Embassy case, to submit that the NCLT will not be the correct forum for the grant of the prayer of deregistration.
12.9 Even otherwise, Section 14 of the IBC altogether is not applicable as the termination as well as IDERA Application were filed prior to the imposition of moratorium. Attention in this regard was drawn to the Judgment of the NCLAT in Neesa Leisure Ltd through its resolution professional Mr. Amit Jain v. Rajasthan State Industrial & Investment Corporation 3, which judgment has been upheld by the Supreme Court4.
12.10 It is only in the case of an inconsistency that Section 238 of the IBC prevails, allowing for a harmonious interpretation of seemingly conflicting provisions to be implemented by the Court. Thus, while analysing the overriding effect of the IBC, the Court should not hinder the enforcement of provisions under the Aircraft Act and Rules. This aligns with the Supreme Court’s ruling in Municipal Corporation of Greater Mumbai (MCGM) v. Abhilash Lal & Ors5, emphasizing that Section 238 of the IBC does not affect rights vested in parties by other legislations. Explanation (a) to Section 18 of the IBC clarifies that assets held under trust or contractual agreements by third parties are not within the purview of assets as defined in the Section 14 of the IBC. As such, the Aircraft, previously held under a contractual agreement, are not subject to the provisions of Section 18 of the IBC. Additionally, Section 63 of the IBC provides that the Suits or proceedings in which NCLT or NCLAT have jurisdiction cannot be entertained by Civil Courts. However, this Court is exercising its jurisdiction not as a Civil Court but under its writ jurisdiction under Article 226 of the Constitution.
12.11 The Petitioners/Lessors while relying on Paragraph 11 of the Respondent/DGCA’s Counter-Affidavit, asserted that no shortfalls actually existed in the Deregistration Applications as had there been any deficiencies, it was the duty of the Respondent/DGCA to communicate these to the Petitioners/Lessors. Instead, the Petitioners/Lessors received letters from the Respondent/DGCA dated 12.05.2023 declining to deregister the Aircraft stating that the deregistration request cannot be processed in view of the ongoing CIRP proceedings of Respondent/Go Air. This action of the Respondent/DGCA was violative of the Article 14 of the Constitution. The Respondent/DGCA has not followed the principles of natural justice by not giving an opportunity of being heard to the Petitioners/Lessors, before passing its order/direction by the letter dated 12.05.2023.
12.12 It is contended by the Petitioners/Lessors that Respondent/DGCA has taken into consideration irrelevant and extraneous factors in making the decision not to deregister the Aircraft. The impugned decision is also liable to be set aside on the grounds of the Wednesbury principle of unreasonableness which states that the Court can interfere with a decision if it is so unreasonable that no prudent decision maker would in law come to it. Reliance has been placed on Vinod Kumar v. State of Haryana & Ors.6 and TATA Cellular v. Union of India7 in this regard.
12.13 The Petitioners/Lessors have submitted that both equity as well as the law in the present case, are in favour of the Petitioners/Lessors. It has also been submitted by the Petitioners/Lessors that the revival of the corporate debtor and that the return of the Aircraft would cause hardships to the corporate debtor could not possibly be used as a defense to not deregister the Aircraft(s). The Petitioners/Lessors rely on the Judgment of the Supreme Court in Popat Bahiru Govardhane & Ors v. Special Land Acquisition Officer & Anr.8 which has held that hardship or inconvenience of a specific party, shall not bar the Court to uphold and enforce the law.
12.14 The Petitioners/Lessors have also drawn the attention of the Court to the erstwhile Twitter handle, now X account of Respondent/Go Air and submitted that the public communication dated 02.05.2023 only mentions that the Respondent/Go Air has decided to suspend operations of Respondent/Go Air due to serviceable issues/operational issues. There is no mention of any voluntary insolvency proceedings and, therefore, submits that the Petitioners/Lessors could not have, in any circumstances known that the Respondent/Go Air is going to file proceedings under the IBC at the time of sending out its Termination Notices to Respondent/Go Air. Thus, it is contended that the termination could not have, in any circumstance be a result of the CIRP/motivated by the initiation of the CIRP.
E. Condition of Aircraft/Cannibilisation
12.15 The Petitioners/Lessors have submitted that the Aircraft that are the subject matter of these Petitions have been grounded and are lying in the Long Term Storing Unit in respective Airports all around India. These Aircraft are admittedly not being flown by the virtue of the grounding notices. The Aircraft are not being maintained in the prescribed manner and are being cannibalised at the various Airports. Reliance is placed on the contentions as set forth in CM Appl. 47257/2023 and CM Appl. 47071/2023 as well.
F. Prayer on directions for Export of Aircraft
12.16 At the outset, learned Counsel for the Petitioners/Lessors in W.P.(C) 6569/2023, W.P.(C) 6626/2023, W.P.(C) 7214/2023, W.P.(C) 7663/2023, W.P.(C) 7774/2023, W.P.(C) 9594/2023, W.P.(C) 10327/2023 and W.P.(C) 10386/2023 have contended that the Petitioners/Lessors would limit their prayers in the Petition(s) to the deregistration of the Aircraft by the Respondent/DGCA. Rule 32A of the Aircraft Rules, which deals with the export of an Aircraft is an event subsequent to its deregistration and for the export of the Aircraft to happen, deregistration is a prerequisite. Reliance was placed on the Standard Operating Procedure dated 16.11.2018 issued by the Respondent/DGCA [hereinafter referred to as SOP] that the SOP emanates from Rule 32A of the Aircraft Rules, clauses 1 to 4 of the SOP deal with deregistration, clauses 5 to 8 of the SOP deal with payments of outstanding clause 9 of the SOP contemplates repossession and export. Hence, the stage of export as per the SOP has not been reached yet, and that these Petitioners/Lessors would seek liberty to urge this prayer at a subsequent stage.
12.17 However, the Petitioners/Lessors in W.P.(C) 9432/2023, W.P.(C) 7369/2023, W.P.(C) 7773/2023, W.P. 8088/2023, W.P.(C) 9900/2023 and W.P.(C) 9901/2023 have asked for the grant of the prayer of the export of their respective Aircraft. It is contended that export of an Aircraft is a natural consequence of the deregistration. It has also been submitted that this Court while deciding the case in Awas case has granted both the prayers of the deregistration and the export of the Aircraft together. If the deregistration of the Aircraft is allowed then the Aircraft has to be exported.
SUBMISSIONS OF THE RESPONDENT/RP OF GO AIR:
13. The following submissions were made on behalf of the Respondent/RP of Go Air:
A. This Court lacks jurisdiction to adjudicate – Only NCLT has the power/Issue of maintainability/Jurisdiction to be decided by this Court
13.1 At the outset, while citing the order dated 07.08.2023 passed by the Supreme Court, it was contended that the issue of jurisdiction is required to be decided by this Court in the first instance.
13.2 A combined reading of Sections 13 and 14 of the IBC state that, it shall be the NCLT, which is the authority that is empowered to enforce a moratorium. Therefore, all issues in relation to the same shall be dealt only with the NCLT. The issues raised in the present Writ has also been raised before the NCLT/NCLAT that has been specially crafted with exclusive jurisdiction to adjudicate upon the issues pertaining to insolvency and the corporate entities that are undergoing the CIRP, these pleas cannot be raised again before this Court, seeking similar reliefs. The Petitioners/Lessors having availed their alternative remedy and failed, cannot now approach this Court. There are complicated issues of facts and law that are being gone into by the NCLT, the same shall not be adjudicated by this Court under Article 226 of the Constitution.
13.3 Since, it was the NCLT that passed the Insolvency Commencement Order that has been relied upon by the Respondent/DGCA in the impugned communication, it can only be the NCLT that shall have the exclusive jurisdiction to hear the cases in relation to this impugned communication.
B. The DGCA did not deregister the Aircraft in view of the moratorium imposed by NCLTs order of 10.05.2023. Not a ministerial Act and only NCLT has jurisdiction to decide this issue
13.4 As a result of the moratorium imposed by the Insolvency Commencement Order, the Respondent/DGCA did not process the Deregistration Applications. This act of the Respondent/DGCA is thus, not a ministerial act. The Respondent/DGCA exercises powers as a quasi-judicial body and this power has been exercised by it in the present case which cannot be termed as a ministerial act.
13.5 In any event, the Deregistration notices and the applications filed thereto shall be treated to be nullity in as the same were only motivated by insolvency of Respondent/Go Air. The Petitioners/Lessors are using the Termination Notices as a smokescreen, which is not permitted in law, reliance in this regard was placed on the judgment of the Supreme Court in the case of TATA Consultancy Services Ltd. v. SK Wheels Pvt Ltd. Resolution Professional, Vishal Ghisulal Jain9.
13.6 This is not a case where the Respondent/DGCA has failed to exercise its jurisdiction under a statute. This is a case where Respondent/DGCA has exercised its jurisdiction by keeping the Deregistration Applications in abeyance in view of the Insolvency Commencement Order. The said action of Respondent/DGCA is well reasoned and in accordance with law. It was contended that no Court can issue a mandamus for directions to a governmental body to refrain from enforcement of a provision of law or to act in contravention of the Rules to compel the authorities to violate the law, as is being suggested by the Petitioners/Lessors. In this regard, reliance was placed on Life Insurance Corporation of India v. Asha Ramchhandra Ambekar (mrs) and Anr10, State of West Bengal v. Subhash Kumar Chatterjee and Ors 11 and M.I. Builders Pvt Ltd. v. Radhey Shyam Sahu and Ors12.
C. Nexus between Insolvency and Deregistration Notices – The Pratt & Whitney engine failure Issue
13.7 There is a clear nexus between the insolvency and deregistration notices and application. There were defects in the Pratt and Whitney engines which are in the Aircraft, which ultimately resulted in the defaults of the lease rentals to the Petitioners/Lessors. Arbitrations and other legal proceedings were filed by the Respondent/Go Air against Pratt and Whitney, which also resulted in Awards in favour of Respondent/Go Air but did not translate into any fruitful result for Respondent/Go Air. For the last 3 years, there were no default notices from either of the Petitioner/Lessors. It was after the filing of the abovementioned application for voluntary insolvency that the Petitioners/Lessors sent the Termination Notices. This fact was highlighted before the NCLT and the NCLT was pleased to initiate the insolvency process for the Respondent/Go Air. The Insolvency Commencement Order was then taken in Appeal to the NCLAT and all these facts were again raised before the NCLAT by the Petitioners/Lessors which challenge was dismissed by the NCLAT by its order dated 22.05.2023, which has not been challenged by the Petitioners/Lessors. These facts clearly show that the termination notices that were sent by the Petitioners/Lessors were arising out of the Insolvency application filed by the Respondent/Go Air and thus are to be heard by the NCLT.
D. Section 60(5) of the IBC cannot be given a narrow interpretation. The IBC has the widest amplitude to deal with all types of matters and the forum for adjudication is the NCLT and NCLAT
13.8 The attention of this Court was then brought to the Termination Notices that were sent to the Respondent/Go Air. It was contended that 11 out of the 14 Petitioners/Lessors have stated that the reason for the termination was on account of the insolvency that has been initiated by the Respondent/Go Air. The termination by the Petitioners/Lessors is directly linked to the insolvency declaration.
13.9 Section 60(5) of the IBC sets out that there shall be only one fora for adjudication of all the claims that arise out of or in relation to IBC, shall be dealt by that fora only, i.e. NCLT. The attention of the Court was then drawn to the report of the Bankruptcy Law Reforms Committee13 to submit that it was after detailed deliberation and keeping in mind that the process of insolvency was fragmented under different statute that IBC was enacted. The Petitioners/Lessors have submitted to the jurisdiction of the NCLT by filing their applications. Reliance was placed upon Section 60(5) of the IBC to submit that it is the NCLT or the NCLAT that shall have the exclusive jurisdiction for each and every matter in relation to a corporate debtor.
13.10 In support of the proposition of law that the NCLT shall be the exclusive forum exercising jurisdiction in relation to the deregistration as the same is arising out of insolvency and that the Courts shall not exercise jurisdiction, reliance was made to the following judgments:
a) Committee of Creditors of Essar Steel India Ltd through authorized signatory v. Satish Kumar Gupta and Ors 14,
b) Gujarat Urja Vikas Nigam Ltd v. Amit Gupta and Ors15,
c) Tata Steel BSL Ltd v. Venus Recruiters Pvt Ltd and Ors 16.
13.11 The Aircraft are the only assets of the corporate debtor, i.e., Respondent/RP of Go Air and the deregistration shall not be done as the same will result in taking away of the Aircraft, that is the only existing asset of the corporate debtor will result in the death of corporate debtor Respondent/Go Air. Reliance in this regard is placed on Gujarat Urja case.
13.12 Relying on the definition of an asset under the Income Tax Act, 1961, it is contended that asset includes property of any kind, thus Aircraft would also fall in this definition. Reference was made to the judgment of the Supreme Court in the case of Victory Iron Works Ltd. v. Jitendra Lohia & Anr.17 in this regard.
13.13 Even assuming that the terminations are valid, the Aircraft were in possession and occupation of Respondent/Go Air as on the insolvency commencement date. Hence, under Section 14(1)(d) of IBC, the possession of Aircraft is with Respondent/Ro of Go Air and this possession cannot be disturbed during the CIRP. Reliance in this regard was placed on the judgement of the Supreme Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Anr 18 to submit that the expression occupied would be synonymous with actual physical possession in contradistinction to the term possession which would mean either constructive or actual possession. Relying on the Arcelor Mittal India private Limited v. Satish Kumar Gupta and Ors.19, an alternate argument has been raised to submit that antecedent facts which are in reasonable proximity to the insolvency commencement date, at the time of a resolution plan, can always be seen by the Courts to prevent persons attempting to wriggle out of such plans.
E. IBC is a Special Statute and a complete code Its provisions will prevail over other statutes
13.14 The IBC is a complete code in itself, and the principles enunciated therein shall be taken be sacrosanct, reliance in this regard was placed on the judgment of the Supreme Court in the case of Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd through the director and Ors 20.
13.15 Section 18(f) and Section 14 of IBC have to be read harmoniously with each other, so that the true intention of the legislature can be construed, which is that the IBC is a special legislation, and its object is revival/resurrection of a corporate debtor and the preservation and the maximisation of its assets. The moratorium under Section 14 of the IBC is the calm period available for resurrection of a distressed entity. Sale of assets of a corporate debtor should only be a last resort.
13.16 The provisions of IBC shall prevail over Aircraft Act and Aircraft Rules in view of Section 238 of the IBC. The IBC being the more recent statute, overrides previous special statutes.
F. Availability of Alternative Remedy
13.17 The present case is not a fit case to be decided by the Court under Article 226 of the Constitution and is a matter for NCLT only. Jurisdiction under Article 226 of the Constitution is not exercised where specialized authorities have been established under a statute. Reliance was placed on the following Judgments:
a) Assistant Collector of Central Excise Chandan Nagar, West Bengal v. Dunlop India Ltd and Ors 21;
b) South Indian Bank Ltd. and Ors v. Naveen Mathew Philip and Anr 22;
c) IFB Agro Industries Ltd. v. SICGIL India Limited and Ors23;
d) Anand Rao Kaorada, Resolution Professional v. Varsha Fabrics Pvt Ltd. & Ors.24
G. Notification dated 03.10.2023 is not a clarificatory notification – cannot be retrospective
13.18 The MCA Notification has been issued under sub-Section (3) of Section 14 of the IBC. A careful review of the MCA Notification shows that the wordings intend to be prospective in nature. The interpretation given by the Petitioners/Lessors and the Respondent/DGCA exceeds the mandate of the statute. Hence, the MCA Notification cannot be considered to be retrospective.
13.19 As per Section 14(1) of IBC, moratorium is imposed as on the date of insolvency commencement. Hence, the law as on date of insolvency commencement i.e., 10.05.2023 alone ought to considered. Previous interpretation of amendments made to IBC also suggest that the MCA Notification should be given a prospective reading as there is no language implicit in IBC which indicates that deregistration is outside the purview of moratorium, reliance in this regard was made to the judgment of the Supreme Court in the case of Ghanshyam Mishra case and State Bank of India v. Ramakrishnan and Anr.25.
13.20 An action by virtue of a delegated legislation cannot be given retrospective applicability and the same is presumed to be prospective in nature, or the same is specifically mentioned in that legislation. Reliance in this regard was made on the judgments in the case of Zile Singh v. State of Haryana and Ors 26 and Monnet Ispat & Energy Ltd. v. Union of India and Ors.27.
13.21 The MCA Notification is required to be construed to be prospective in nature as it is not clarificatory. In any event, an executive action cannot be given retrospective effect when the parent act does not endow the executive authority with the power to pass notification with retrospective effect. Reliance in this regard was made in the case of Director General of Foreign Trade and Anr v. Kanak Exports and Anr.28 and Assistant Excise Commissioner, Kottayam and Ors. v. Esthappan Cherian and Anr 29.
13.22 NCLT and the NCLAT has previously decided on the prospective/retrospective application of notifications issued by Central Government under IBC, reliance was placed on the judgment of the NCLAT in this regard in the case of Madhusudan Tantia v. Amit Choraria and Anr.30. Therefore, NCLT will be the most appropriate authority for the interpretation of the retrospective/prospective application of the MCA Notification and not this Court.
H. Inapplicability of judgments of the Petitioners/Lessors
13.23 The attention of the Court was then drawn to the Judgments as
relied upon by the Petitioners/Lessors contending that the Awas case was prior in time on the implementation of the IBC and that the same shall have no bearing on the facts of the case on the basis of the provisions of Section 238 of the IBC. The termination in the Neesa Leisure case and the Abhilash Lal case was prior in time on the implementation of the IBC and therefore the same shall also have no bearing on