NCLT refuses to restrain Go First from flying planes

The National Company Law Tribunal Wednesday declined to restrain Go First from operating or flying aircraft, in significant relief for the beleaguered airline. In its interim order, the tribunal said as the civil aviation regulator Director General of Civil Aviation had not deregistered the aircraft, they are available to the corporate debtor to resume operations. “As long as the aircraft/engines are registered, they can be used for operating or flying to keep the corporate debtor as a going concern, however, within the safeguards/safety norms prescribed by the regulators,” the tribunal said in its order.

Go First had approached the NCLT to file a Section 10 application for voluntary insolvency, which was admitted on May 10. The tribunal also dismissed another plea by engine and aircraft lessors seeking permission for inspection of aircraft saying that inspections would impede the discharge of the resolution professional’s duty. However, the tribunal emphasised on RP’s responsibility to maintain the airline's aircraft and engines. “This Adjudicating Authority strongly reiterates the responsibility of the Resolution Professional to maintain the property/Aircraft/engines at the highest levels of efficiency/safety,” the tribunal stated.

The senior counsel appearing for the resolution professional had informed the tribunal that the Committee of Creditors had set aside a substantial amount to restore the airline's functioning and pay lease rents.

The tribunal reiterated that in its earlier order dated June 15 it had stated the duties of “Resolution Professional with respect to preserving and protecting the assets in his possession” as warranted under Section 25(1) of the Insolvency and Bankruptcy Code, 2016.

The aircraft and engine lessors of the airline had approached the tribunal following the Delhi High Court’s July 5 interim order that allowed eight aircraft lessors of the airline permission for inspection and maintenance of the 30 aircraft owned. They had sought similar relief from the NCLT.

The Delhi High Court had also restrained Go First from moving, removing and replacing any part of the aircraft without prior permission from the lessors. “The present applications are filed in the Corporate Insolvency Resolution Process proceedings under the Insolvency & Bankruptcy Code and hence, need to be considered in the light of the provisions contained in the IBC, 2016,” the tribunal noted, highlighting that Delhi HC order did not lay down any law by its order.

In its findings, the tribunal noted that there could be little doubt that applicants were aware of the voluntary insolvency plea filed by Go First on May 2 and that the termination of lease agreements or termination of notices was a step to evade the moratorium.

The airline has received a conditional nod from the civil aviation regulator Directorate General of Civil Aviation (DGCA) to resume operations. The resolution professional for Go First earlier this month had invited Expression of Interest from investors.