2023 (10) TMI 1387 - HC - Insolvency and Bankruptcy

Doctrine of merger - Seeking urgent directions for full and proper access to and inspection of all Aircraft documents records including its maintenance record/storage preservation records - HELD THAT - The objection raised by Respondent/RPof Go Air on the doctrine of merger cannot be agreed upon. The doctrine of merger enunciated by the Supreme Court does not have a universal or unlimited application. For a merger to operate the superior court must examine the issues and record findings on merits. The decision in KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER 2000 (7) TMI 67 - SUPREME COURT also sets forth that doctrine of merger applies once a superior court has disposed of the lis before it. The Supreme Court in the case of Kaikhosrou (Chick) Kavasji Framji v. Union of India 2019 (3) TMI 1961 - SUPREME COURT has reiterated this and clarified that the merger principle is applicable to a decision on merits. Thus the doctrine of merger is applicable only when an Appellate Court has gone into the merits of the case. In any event it has now been more than five months since the Aircraft were grounded by the Respondent/RP of GoAir. A review of the documents and photographs filed by the Petitioners/Lessors show the evident cannibalization of the Aircraft. The Petitioners/Lessors have made out a prima facie case and it has become necessary for this Court to pass additional directions to protect these highly valuable equipment during the pendency of the present case - It is also deemed necessary that the Petitioners/Lessors be permitted to contract a 24 hour security services for all the Aircraft to be provided at the expense of the Petitioners/Lessors. The Respondent/RP of Go Air shall within the next fourteen days provide access to the Petitioners/Lessors of the documentations in relation to the Aircraft the Airframe its engines and other parts and components - application disposed off.

Summary

Issues Involved:
1. Modification of the interim 05.07.2023 Order.
2. Urgent directions for full and proper access to and inspection of all Aircraft documents and records.

Summary:

Issue 1: Modification of the interim 05.07.2023 Order
The Petitioners/Lessors filed applications seeking modification of the interim 05.07.2023 Order and urgent directions for inspection of Aircraft documents and records. The 05.07.2023 Order allowed the Petitioners to inspect their Aircraft and carry out maintenance tasks. The Division Bench (DB) Order dated 12.07.2023 modified this by permitting GoAir, through RP, to carry out all maintenance tasks with due permissions, while allowing Lessors to conduct monthly inspections. The Supreme Court dismissed a challenge to the DB Order, directing that jurisdictional issues be addressed before the High Court.

Issue 2: Urgent Directions for Inspection of Aircraft Documents
The Petitioners/Lessors argued that the inspection of Aircraft should include the inspection of records and documents as defined in the Lease Agreements. They contended that without access to these documents, the inspection would be ineffective. The Respondent/RP of GoAir opposed this, citing that the 05.07.2023 Order did not mandate providing Aircraft documents and that the DB Order had attained finality. The Respondent also argued that obtaining these documents would be onerous and time-consuming.

The Court noted that the term "Aircraft" in the Lease Agreements includes Aircraft Documents, making it necessary for a meaningful inspection. The Court found evidence of cannibalization of Aircraft parts and emphasized the need to protect these valuable assets. The Court dismissed the objection regarding the doctrine of merger, stating it does not apply universally and is only relevant when an Appellate Court examines issues on merits. The Court also rejected the forum shopping allegation, noting that similar prayers before the NCLT were not pressed by the Petitioners/Lessors.

Court's Directions:
1. Provision of Documentation: The Respondent/RP of GoAir must provide access to records related to the removal of parts, storage, historical records, updated technical records, and any other documents necessary to ascertain the airworthiness of the Aircraft within fourteen days.
2. Security Services: Petitioners/Lessors are permitted to contract 24-hour security services for the Aircraft at their own expense, with DGCA facilitating access.
3. Maintenance: The Respondent/RP of GoAir must continue to maintain the Aircraft as previously directed.

These directions apply to all 54 Aircraft involved in the petitions, and the applications seeking modification of the 05.07.2023 Order were accordingly closed.