SC rejects Go First's appeal against HC order allowing access to aircraft

Go First challenged the division Bench order of the Delhi High Court in the Supreme Court on 2 August

The Supreme Court (SC) on Monday dismissed Go First’s resolution professional appeal against the Delhi High Court’s (HC’s) single-judge order, which permitted lessors access to the aircraft in the possession of the financially troubled airline.

The apex court stated that as the matter was already being extensively argued daily before the Delhi HC, it would not be appropriate for the top court to interfere.

“The proceedings are pending before the Delhi HC, where petitions are being argued on a day-to-day basis. We are not entertaining this at the present stage. Let the jurisdictional issues also be addressed before the single judge,” the Bench, comprising Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra, said.

Go First had challenged the division Bench order of the Delhi HC in the SC on August 2. The disputed order upheld a single judge’s ruling allowing the crisis-hit airline’s lessors to inspect the aircraft.

Last Thursday, the lessors informed HC that future aircraft leasing would be jeopardised if the Directorate General of Civil Aviation (DGCA) fails to deregister the aircraft whose leases have been terminated.

Senior Advocate Mukul Rohatgi, representing one of the lessors, pointed out that the involuntary retention of their aircraft reflects negatively on the Indian aviation sector. He also noted that while the civil aviation regulator has not outrightly rejected their request for deregistration, it has been placed in abeyance due to the ongoing moratorium.

A moratorium is a period during which most, or certain, legal actions against a debtor are suspended. It commences once a company enters insolvency or bankruptcy proceedings.

The lessors argued that, under the Irrevocable Deregistration and Export Request Authorisations, the DGCA is obligated to deregister the aircraft upon their request.

Go First ceased operations on May 3, and its request for voluntary insolvency was approved by the National Company Law Tribunal (NCLT) on May 10, initiating the moratorium period.

“The SC’s refusal to intervene in Go First’s plea underscores the intricate legal landscape the airline must navigate. With an outstanding rental lease of Rs. 500 crore and ongoing challenges between fora like the NCLT and the Delhi HC, Go First’s path to revival appears to be a complex puzzle. The airline’s ability to honour its commitments and successfully align with both regulatory requirements and creditors’ interests will be pivotal in determining its future,” said Sonam Chandwani, managing partner, KS Legal & Associates.

                   Do not wish to take stand in Go First refund case: IBBI tells NCLT

The Insolvency and Bankruptcy Board of India (IBBI) told the National Company Law Tribunal (NCLT) on Monday that they do not wish to take a stand in Go First's application seeking permission to refund passengers for their advanced bookings since the insolvent airline’s grounding on May 3.

The NCLT told them to state this in their reply and adjourned the case to August 25. 

According to the resolution Professional(RP), Go First has to refund Rs 597.54 crore to 1,550,000 passengers, which includes advanced bookings till June 7. As many as 1,525,862 passengers have booked tickets through travel agents amounting to 582.77 crore and 23,711 passengers have booked tickets on the company website amounting to 14.77 crore.

Meanwhile, the Committee of Creditors(CoC) of the airlines will file their reply by the next hearing. 

CoC is a group of lenders that represent the interests of all stakeholders in the insolvency process.