Go First Insolvency: Lessors Terminated Lease Fearing IBC Consequences, Says NCLT
NCLT rules that only the resolution professional can maintain and protect leased aircraft, engines of Go First.
The NCLT offered relief to Go First on Wednesday as it refused to restrain the beleaguered airline from using the aircraft or engines leased by its lessors.
The National Company Law Tribunal clarified that only the resolution professional could maintain and protect the aircraft.
The lessors had sought interim relief to ensure that their aircraft, its engines, and other parts were protected from unauthorised access, removal, replacement, operation, or use by Go First. They also sought permission to depute an inspector to inspect the engines. They contended that since their lease agreements with Go First had been terminated, the airline did not have any right over the aircraft.
Go First argued that if it was stopped from operating the leased aircraft, it wouldn't be able to sustain itself. It said access to the aircraft and the engines was required for the resolution professional to fulfil his obligation to continue the airline's functions as a going concern.
The tribunal observed that since a moratorium was declared for Go First, any property occupied by it could not be recovered by the lessors. The NCLT said the leased aircraft would come under the scope of property under the Insolvency and Bankruptcy Code, and their possession undisputedly lies with the airline itself.
The bench rejected the contentions of the lessors that they terminated the lease agreements with the airline due to default on payments. The NCLT observed that since the insolvency proceedings were widely reported, it was highly indicative that the termination notices were issued to escape the rigours of a moratorium.
Earlier, the Delhi High Court had passed an interim order for the lessors, allowing them to inspect the aircraft monthly. It had also restricted Go First from taking out any part of the planes without the permission of the lessors.
However, the NCLT observed that the lessors before the bench were not parties to the batch of writ petitions filed in court. It said the high court did not lay down any new law in the matter and, hence, the NCLT ruling would apply to the lessors present before it.
The lessors before the NCLT include Bluesky 31 Leasing Co., Jackson Square Aviation Ireland Ltd., SMBC Afro Engine Lease B.V., BOC Aviation (Ireland) Ltd., and Engine Leasing Finance Ltd.
On the request of the lessors to be allowed to inspect the aircraft, the bench said it was the duty of the RP to maintain the assets at the highest level of efficiency and safety, and there was no need for any other inspection.
The NCLT found that the RP was already under an obligation to maintain and protect the assets and, hence, an inspection would not serve any useful purpose.
