HC Allows Maintenance of Aircraft Until De-registration to Avoid Irreparable Losses Due to Lease Termination

Case Details: Accipiter Investments Aircraft 2 Ltd. v. Union of India - [2023] 155 taxmann.com 455 (HC-Delhi)

Judiciary and Counsel Details

• • Ms Tara Vitasta Ganju, J.
  • Satvik Verma, Sr. Adv., Ravi Nath, Ankur Mahindru, Rohan Taneja, Aditya Kapur, Tanveer Oberoi, Tushar Mudgil, Mehul Jain, Tarun & Ankit, Advs. for the Petitioner.
  • Rajesh Gogna CGSC, Ms Anjana Gosain, SPC, Ms Avshreya Pratap Singh Rudy, Ms Nippun Sharma, Advs., Ramji Srinivasan, Sr. Adv., Anuj Berry, Siddharth Ranade, Ramakant Rai, Sourabh Rath, Ms Somesh Srivastava, Varun K. Tikmani, Aryan Agrawal, Ms Shruti Pandey, Ms Namrata Sarogi & Ms Drishti Kaushik, Advs. for the Respondent.

Facts of the Case

In the instant case, the petitioners were the lessors and the owners of aircrafts that had been leased to the respondent-corporate debtor ‘GO AIR’ and, a lease agreement was executed. Later, due to the default committed by corporate debtors in payment of lease rentals, the lease agreement was terminated by the petitioners.

Consequently, the petitioners issued a notice of default and termination to the respondent, in which it was directed to immediately cease the operation of the aircraft and demanded possession of the aircraft. The said termination notice further directed the lessee to provide necessary assistance and cooperation for the de-registration and export of aircraft.

Thereafter, an application for de-registration of aircraft under Rule 30(7) of Aircraft Rules was filed by the petitioners with the Director General of Civil Aviation (DGCA). In the meantime, the respondent initiated proceedings before NCLT under section 10 of the Insolvency and Bankruptcy Code, 2016 for initiation of voluntary CIRP against itself and the same was admitted by NCLT.

Subsequently, the moratorium was imposed. Later, the NCLT’s order was challenged in an appeal before the NCLAT. However, the NCLAT upheld NCLT’s order. The petitioners filed an instant petition for interim relief stating that DGCA failed to de-register their aircraft in contravention of sub-rule (7) of Rule 30 of Aircraft Rules, 1937.

High Court Held

The High Court held that once an event of default had occurred and petitioners had terminated the lease agreement and commenced the process of de-registration of aircraft, such aircraft could not be flown.

It was further observed that the petitioners were suffering irreparable losses as the value of aircrafts were diminishing on a daily basis and there could be no denial of the fact that aircrafts of petitioners were extremely valuable and highly sophisticated equipment and required regular maintenance for their preservation.

Therefore, HC directed the DGCA to permit RP to carry out mandatory maintenance/engine run of aircraft until its de-registration.

List of Cases Reviewed

• • Rajendra K. Bhutta v. Maharashtra Housing & Area Development Authority [2020] 114 taxmann.com 655/160 SCL 95 (SC) (para 16.2) distinguished.

List of Cases Referred to

• • Awas 39423 Ireland Ltd. v. Directorate General of Civil Aviation 2015 SCC online Del 8177 (para 4.1)
  • Wellington Associates Ltd. v. Kirit Mehta [2000] 25 SCL 443 (SC) (para 4.5)
  • Anand Rao Korada Resolution Professional v. Varsha Fabrics (P.) Ltd. [2019] 111 taxmann.com 474/[2020] 157 SCL 350 (SC) (para 5.1)
  • Rajendra K. Bhutta v. Maharashtra Housing & Area Development Authority [2020] 114 taxmann.com 655/160 SCL 95 (SC) (para 5.1)
  • Victory Iron Works Ltd. v. Jitendra Lohia [2023] 148 taxmann.com 290/178 SCL 37 (SC) (para 5.2)
  • Tata Steel BSL Ltd. v. Venus Recruiter (P.) Ltd. [2023] 146 taxmann.com 300 (Delhi) (para 5.3)
  • Tata Consultancy Services Ltd. v. Vishal Ghisulal Jain, Resolution Professional of SK Wheels (P.) Ltd. [2021] 132 taxmann.com 232/170 SCL 153 (SC) (para 5.3)
  • Abhilash Lal v. Harsh Ghanghwale [Civil Appeal No. 2405 of 2023, dated 29-3-2023] (para 5.3)
  • Embassy Property Developments (P.) Ltd. v. State of Karnataka [2019] 112 taxmann.com 56/[2020] 157 SCL 445 (SC) (para 7.1)
  • Radha Krishan Industries v. State of Himachal Pradesh [2021] 127 taxmann.com 26/86 GST 665 (SC) (para 16.4).