NCLT seeks reply from Go First on Delhivery plea as settlement talks fail

On Thursday, the National Company Law Tribunal (NCLT), Delhi, sought a response from the Resolution Professional (RP) of Go First regarding logistics company Delhivery's plea, after talks of settlement between both parties failed. The case is likely to be heard on September 15.

Go First had informed the NCLT on July 24 that it was exploring a settlement with Delhivery. In their petition, Delhivery stated that the insolvent airline received over Rs 1.58 crore from them for providing domestic cargo consignment services, but the airline never acted on it. The company clarified that the money was paid in accordance with an agreement between both companies, initially made in 2020. This agreement was last renewed on August 4, 2022, and extended up to February 16, 2023.

Currently, Delhivery and Go First are operating within the period of a further extension, although this has yet to be formalised in writing, according to the plea.

The plea filed by Delhivery invokes Section 65 of the Insolvency and Bankruptcy Code, 2016, which deals with penalties for fraudulent or malicious initiation of insolvency proceedings. This means that the NCLT may impose a penalty on an applicant that fraudulently or maliciously applies for insolvency with an intention other than the resolution of insolvency.

Delhivery alleged that Go First received Rs 57 lakh on May 2, the very day it filed for insolvency, despite knowing that it might not be able to provide its services in the near future.

"The sole intent of the Corporate Debtor (Go First in this case) is to hijack the process of insolvency to the detriment of the bona fide Applicant (Delhivery in this case) and is an abuse of the process of law," Delhivery's plea stated.

NCLT Delhi admitted Go First's plea for voluntary insolvency on May 10, placing the airline under a moratorium period. A moratorium, as defined under Section 14(1) of the Insolvency and Bankruptcy Code (IBC), entails the suspension of all or certain legal remedies against a debtor (Go First in this case). As a result, lessors of Go First will not be able to take possession of the aircraft.

Subsequently, the National Company Law Appellate Tribunal upheld the NCLT order on May 22 and instructed the lessors to return to NCLT for further relief.

There is also an ongoing case in the Delhi High Court involving lessors of the airline, who are seeking to release the aircraft in the possession of Go First.

Go First ceased flying on May 3.