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2015 (3) TMI 1427

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..... GCA under clause (iv), sub-rule (6) of Rule 30 of the Aircraft Rules requires it to de-register an aircraft if, the lease agreement qua the aircraft object is not in force. Notably, like under clause (iv), each of the circumstances set out in subrule (6) are independent of each other. It may be, in a given situation that, more than one circumstance is attracted. A bare perusal of the unamended clauses of sub-rule (6) of Rule 30 would show that all that the DGCA is required to do is to ascertain whether circumstances exist, once it is found circumstances exist as contemplated in the relevant clause, and the DGCA is found wanting, a writ of mandamus could issue to compel performance. The fulfilment of ministerial act and, therefore, vesting of a minor discretion in that behalf, if it can be called one ought not to deter a court from not issuing a writ of mandamus. The learned ASG was not able to inform as to whether or not, there are liens obtaining vis-a-vis the aircraft objects under the Municipal law; as contemplated under Article 39(1) of the Convention. The difficulty has been compounded by the fact that the DGCA, has not filed its return in the matter. Therefore, the DGCA .....

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..... ee petitioners in this matter. Each of these petitioners claim to be represented by their respective power of attorney holders. The petitioners, apparently, entered into lease agreements, on various dates, with Spicejet. At that stage, Spicejet executed two crucial documents in favour of the petitioners. First, an Irrevocable De-Registration Power of Attorney (IDPOA). Second, an Irrevocable De-Registration and Export Request Authorization (IDERA). The details, with respect to the aircraft objects in respect of which the aforementioned documents have been executed, are as follows: Petitioners Aircraft Model Manufacturer s Sl. No Indian Registration Mark Lease agreement date IDPOA date IDERA date Certificate of registration 1 B 737800 39423 VT-SGZ 30.4.12 30.4.12 30.4.12 14.05.12 2 B 737800 .....

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..... return the same to them to the place already indicated. 2.4 Since, Spicejet continued to operate the aforementioned aircraft objects, even though the lease agreements vis-a-vis each one of them had been terminated, the petitioners, made a request to the DGCA, vide three separate communications of even date, i.e., 26.12.2014, to de-register the aircraft objects from the ICAR and, to issue an Export Certificate of Airworthiness to enable them to ferry the aircraft objects out of the country, at their costs. 2.5 As there was no response by the DGCA to the petitioners communications of 26.12.2014, by way of follow-up, once again, three separate communications were sent, all of which were dated 29.12.2014, in respect of the aforementioned aircraft objects. 2.6 In the interregnum, DGCA had issued a communication dated 26.12.2014, which the petitioners claim, they received on 29.12.2014 as an attachment to an email of the same date, whereby they were directed to submit the following documents/ information: (i) Certificate of registration in original. (ii) Confirmation on de-activation of aircraft objects address for Mode S transponder . (iii) Application for issua .....

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..... ed at the Hosur Airport, in Belagondapalli or, at the Indira Gandhi International Airport, in New Delhi. 3.3 The aforesaid communication by the petitioners was followed by a communication dated 09.01.2015, addressed to the DGCA. In the said letter, a reference was made to the proposed amendment to be carried out in Rule 30 of the Aircrafts Rules, 1937 (in short the Aircraft Rules). While doing so, the petitioners sought to bring to the notice of DGCA the following: (i) That the petitioners, i.e., the lessors, were the authorized parties under IDERA executed by Spicejet qua each of the aforementioned aircraft objects. (ii) The lessors/ owners and mortgagees were the only registered interest holders , in respect of the said aircraft objects, and that, there were no other registered interest holders in existence. 3.4 Accordingly, with this letter dated 09.01.2015, the petitioners appended the following for DGCA s reference: (a) IDERAs. (b) Priority interest search certificates in respect of airframes and related engines, as on the said date. (c) Consent letters of respective owners and mortgagees dated 12.12.2014 and 18.12.2014 respectively, which had already bee .....

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..... e aircraft are provided hereinafter in the tabular chart: S. No. Aircraft Model Manufacturer s Sl. No Indian Registration Mark Lease agreement date IDPOA date IDERA date Certificate of registration 1 B 737800 37364 VT-SZI 7.8.13 3.10.13 03.10.13 14.10.13 2 B 737800 41397 VT-SZJ 7.8.13 24.1.14 24.1.14 03.02.14 3 B 7378GJ 41398 VT-SZK 7.8.13 21.5.14 21.5.14 26.5.14 5.1 As in the other case, Spicejet defaulted in payment of lease rent, which resulted in the petitioner issuing a common default notice dated 10.12.2014, as a termination event had occurred, as provided for in clause 23( .....

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..... a letter dated 06.01.2015, wherein they reiterated the fact that they had, as far back as on 10.12.2014, requested Spicejet to allow the export of aircraft objects at their expense upon termination of the respective lease agreements. The petitioner, sought assistance of the DGCA, in de-registration of aircraft objects in consonance with their earlier request dated 30.12.2014. A passing reference was also made with regard to the fact that, they had a bad experience , like other companies, in respect of another Indian airline company, i.e., Kingfisher, and hence, were concerned about getting involved in a lengthy repossession process. 5.9 The aforesaid was followed by yet another communication by the petitioner, on the subject, dated 09.01.2015. In this communication, inter alia, a reference was made to a meeting which its representatives had attended on 08.01.2015, with the Jt. Secretary in the Ministry of Civil Aviation. 6. The DGCA was reminded that, at the meeting they were informed by its Deputy Director of Airworthiness that, under the IDERA route, it would de-register the aircraft objects within five working days, upon documents being furnished. It appears, in the said .....

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..... its before the next date of hearing. 6.8 On the returnable date, i.e., 20.01.2015, it was found that while Spicejet had filed its counter affidavit, DGCA, had failed to do the needful. On account of urgency expressed in the matter, arguments were heard on that date and on several dates thereafter. The judgement, was finally reserved, in this matter as well, on 05.03.2015. SUBMISSIONS OF COUNSELS 7. In the background of the aforesaid facts, arguments in WP(C) 871/2015 were advanced by Mr Kevic Setalwad, Sr. Advocate on behalf of the petitioners, while in WP(C) 747/2015, submissions were made by Mr Ramji Srinivasan, Sr. Advocate. In so far as the DGCA was concerned, submissions were made by Mr Sanjay Jain, the learned ASG, assisted by Ms Anjana Gosain, while Spicejet was represented by Mr Sandeep Sethi, Sr. Advocate, assisted by Mr Atul Sharma. 8. On behalf of the petitioners (i.e., in WP(C) 871/2015) Mr Setalwad, broadly, argued as follows: (i) That the lease qua the aircraft objects, having been terminated, followed by the lodgement of the IDERA with the DGCA, the provisions of Article IX of the Protocol had been triggered. The petitioners, being the only regist .....

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..... the deregistration and the export of the aircraft objects. (vii)(b) The petitioners having lodged both these documents with their letter dated 09.01.2015; the DGCA was bound, in law, to de-register the aircraft objects. (viii) A mandamus could issue to the DGCA to discharge its duties cast upon it, in law, once the conditions prescribed therein, stood fulfilled. The law required placement of documentary evidence of a fact that the lease qua the aircraft objects, on the date when request for de-registration was lodged was not in force. The factum of the lease having been terminated, is reflected by the termination notice, which in turn, is based, on the rights conferred on the petitioners under IDERA. (viii)(a) The other requirement that, there was no other registered interest which ranked higher than the petitioners , having also been fulfilled upon lodgement of a priority interest search certificate, the DGCA, was bound to proceed to de-register the aircraft objects. (ix) In support of his submissions, reliance was placed by Mr Setalwad, on the judgement of this court in Corporate Aircraft Funding Company LLC vs Union of India Ors., (2013) 199 DLT 327, and the Divisi .....

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..... of their respective claims. (iv)(a). Reference in this respect was made to the details of deposits held by the petitioners, as set out in paragraph 13 of the counter affidavit, filed in each of the two petitions. (v). The issue, as to whether the petitioners are entitled to terminate the subject lease agreements, is an aspect, which requires determination by a competent court of law. (vi). Spicejet has filed a scheme of reconstruction and revival for enabling take over of its ownership, management and control with the Government of India, Ministry of Civil Aviation, on 15.01.2015. The said scheme has received the approval of Government of India on 22.01.2015. The scheme of acquisition of interest by the new promoter has also received approval of the Competition Commission of India vide order dated 19.02.2015. (vii). In case the petitioners are allowed to repossess the aircraft objects, great prejudice would be caused to Spicejet which, cannot be compensated in terms of money. The repossession of aircraft objects will engineer a collapse of the turn-around plan and, would, consequently, impact public interest as, it would impinge on the employment prospects of the person .....

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..... of Spicejet, stressed upon the following, in so far as the declarations lodged by the Government of India are concerned :- (i). The power to de-register an aircraft conferred on DGCA under Rule 30 of the Aircrafts Rules is an enabling power, and that, in exercising this power, it would have to take into account the various liens that may obtain vis-a-vis the aircraft objects. (i)(a). It is pertinent to note here that the learned ASG on being queried as to whether the declarations lodged by the Government of India could travel beyond the Municipal Law agreed that the declarations could not enlarge the scope of the Municipal Law. On being further queried, as to what were those Municipal Laws, under which liens were sought to be enforced, the learned ASG, candidly, stated that this aspect of the matter had not been examined by the DGCA. (ii) Therefore, in the context of the above, the learned ASG submitted that as long, as this court, were not to order export of the aircraft objects, the other aspect of de-registration, could be dealt with in the present petitions. REASONS 12. I have heard the learned counsel for parties and perused the record. What has emerged f .....

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..... ment(s). For this purpose, the Convention has put in place an international registration system. 15.1 The idea being to provide, uniformity, certainty and predictability in commercial transactions involving high financial stakes. The Convention while protecting the interest of the creditors seeks to give due deference to the National Legal Regime, i.e., the Municipal Law of the Contracting State. Therefore, logically and, quite clearly, the Convention does not affect National Legal Regimes which concern and are relatable to criminal conduct and tortious liability. The Convention, also, does not appear to impinge upon public law issues. 15.2 The thrust of the Convention is to make available private finance for mobile equipments, to persons, situate in Contracting States. 15.3 The Convention, as currently positioned, deals with airframes and aircraft engines; helicopters; railway rolling stock; and space assets. It is the Protocol, which is, industry specific, which, provides the necessary frame-work vis-a-vis the concerned industry. Therefore, the Aircraft Protocol, which is referred to, for sake of brevity, as the Protocol, both supplements and, wherever necessary, modifie .....

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..... xpressed to require application to the court may be exercised only with the leave of the court. 16.7 I may only note that under Article 54(2) of the Convention, the Government of India has filed in Form No.13, with the following mandatory declaration: ...Any and all remedies available to the creditor under the Convention which are not expressed under the relevant provision thereof to require application to the court may be exercised without court action and without leave of the court. (emphasis is mine) 16.8 This would mean that in its declaration filed under the Convention, the Government of India has made it categorically clear that unless the remedy available to the creditor under the Convention, requires application to the court, the same can be exercised without court action and without the leave of the court . This is important in the context of Article IX of the Protocol, as would be evident from the discussion, set forth hereafter. 16.9 In these circumstances, the petitioners are entitled to approach a court and, seek advance relief pending final determination under Article 13 of the Convention. The relief that the petitioners can seek under the said Arti .....

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..... acting State, shall expeditiously, co-operate with and assist the authorised party in exercise of the remedies provided under Article IX. Therefore, if a Contracting state has made a declaration pursuant to Article XXX (1) of the Act, and if, an IDERA is issued by the debtor, in this case, Spicejet, which is substantially in the Form annexed to the Protocol (which is recorded with the registry authority ), then, on the authorised person or its certified designee triggering the remedy under Article IX (1) (having regard to the applicable aviation safety laws and regulations), the same will have to be honoured by the registry authority and other administrative authorities of the Contracting States. 17.6 In the present case, a declaration has been filed by the Government of India in Form No. 27 under Article XXX (1), as required under Article XIII of the Protocol. The debtor i.e., Spicejet, has admittedly issued an IDERA, which stands lodged with DGCA. Consequently, the remedies under Article IX (1) of the Protocol, stand triggered. 17.7 Pertinently, none of the provisions of Article IX refer to court intervention. In other words, remedy under Article IX can be availed of b .....

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..... ed in conformity with a provision of the agreement except where such a provision is manifestly unreasonable. 4. A chargee giving ten or more working days prior written notice of a proposed sale or lease to interested persons shall be deemed to satisfy the requirement of providing reasonable prior notice specified in Article 8(4) of the Convention. The foregoing shall not prevent a chargee and a chargor or a guarantor from agreeing to a longer period of prior notice. 5. The registry authority in a Contracting State shall, subject to any applicable safety laws and regulations, honour a request for de-registration and export if: (a) the request is properly submitted by the authorised party under a recorded irrevocable deregistration and export request authorisation; and (b) the authorised party certifies to the registry authority, if required by that authority, that all registered interests ranking in priority to that of the creditor in whose favour the authorisation has been issued have been discharged or that the holders of such interests have consented to the de-registration and export. 6. A chargee proposing to procure the de-registration and export of an aircraf .....

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..... or interest which shall be registrable under this Convention as regards any category of object as if the right or interest were an international interest and shall be regulated accordingly. Such a declaration may be modified from time to time.. 18. Having regard to the aforementioned extracts from the Protocol and Convention, let me begin with the effect that of provisions of clause (5) of Article IX of the Protocol on the issue under consideration. Article IX(5) of the Protocol casts an obligation on the registry authority in the Contracting State to honour a request for de-registration and export, if the following two conditions, are fulfilled. First, the request made, is properly submitted by an authorised party, under a recorded IDERA. Second, the authorised party certifies to the registry authority that all registered interests ranking in priority to that of the creditor in whose favour the authorisation has been issued have been discharged, or that, the holders of such interests have consented to the de-registration and export. 18.1 Admittedly, in this case both these conditions have been fulfilled. 18.2 The respondents, however, contend that since the definition of .....

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..... seller reserving title under an agreement or, even a lessor under a lease agreement. The petitioners, in the captioned petitions fall under the last category, that is, they are lessors under a lease agreement. 18.5 Thus, quite clearly, these rights and interests, referred to in the declaration filed under Article 39(1)(a) are created under the Municipal Law of the Contracting State and, are not, conferred by the Convention. 18.6 Therefore NCRIs covered by the declarations lodged by the Contracting State would have a priority over registered international interest, even though, they are not registered themselves. 18.7 I may only note here that an interest is construed as an international interest under the Convention, if it fulfils the requirements of Article 7 of the Convention. In the context of the lessor, it would suffice if, the agreement creating or providing for such an interest is: in writing; relates to an object qua which the lessor has the necessary power of disposal; and it enables the object to be identified in conformity with the Protocol. (Also see, Article 2 of the Convention). 18.8 The arguments advanced by Mr. Setalvad, based on Article 40 of the Conve .....

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..... f amounts owed to the Government of India, any such entity, organization or provider directly relating to the service or services provided by it in respect of that object or another aircraft object. (iii). Form No.6 (opt-in declarations under Article 40) The following categories of non-consensual right or interest shall be registrable under the Convention as regards any category of aircraft object as if the right or interest were an international interest and shall be regulated accordingly, namely :- (a) liens in favour of airline employees for unpaid wages arising prior to the time of a declared default by that airline under a contract to finance or lease an aircraft object; (b) liens or other rights of an authority of India relating to taxes or other unpaid charges arising from or related to the use of an aircraft object and owed by the owner or operator of that aircraft object, and arising prior to the time of a declared default by that owner or operator under a contract to finance or lease that aircraft object; and (c) rights of a person obtaining a court order permitting attachment of an aircraft object in partial or full satisfaction of a legal judgment.. 1 .....

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..... ered by the existence of liens, if any, under the Municipal Law of the Contracting State. The liens, as indicated above, under Article 39(1) (a) shall obtain if so provided under the Municipal Law. The extent of the lien shall also be governed by the Municipal Law and not by the Convention. 20.1 The learned ASG during the course of his submission was not able to inform me, as to the Municipal Law under which DGCA has liens, and whether, the appropriate stage had been reached for triggering any of the liens, referred to in the declarations lodged by the Government of India. 21. This brings to the issue as to the statutory obligation cast on the DGCA. The provisions of Rule 30 of the Aircraft Rules, are relevant for this purpose. Once again for the sake of convenience, the relevant provisions are extracted below :- ...30. Certificate of Registration (1). The authority empowered to register aircraft and to grant certificate of registration in India shall be the Central Government. The certificate of registration shall include the following particulars, namely :- Type of aircraft, constructor s number, year of manufacture, nationality and registration marks referred to unde .....

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..... the registrant has supplied false information, or that, the certificate of airworthiness stood expired for a period of five years or more, or if a situation arose whereby, the aircraft was destroyed or permanently withdrawn from use. In other words, the submission was, the word, may should be read as shall . 21.5 As against this, the respondents have vehemently argued that it is only an enabling power, and therefore, the decision in this regard will have to be taken by the DGCA, and that, there can be no directive by the court to act in a particular manner. It is, in this context, that the counsel for the respondents had relied upon the Division Bench judgment of this court in the case of: DRI Vs. Corporate Aircraft Funding Company LLC. 21.6 The argument that, this court cannot issue a writ of mandamus to DGCA is sought to be supported by placing reliance on two Supreme Court judgments, referred to in the Division Bench judgment in the case of DRI Vs. Corporate Aircraft Funding Company LLC. These being: U.P. SRTC Anr. Vs. Mohd. Ismail Ors. and UOI Anr. Vs. Bilash Chand Jain Anr. 21.7 I may only note that the Division Bench in the case of DRI Vs. Corporate Aircr .....

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..... , evident on perusal of the dicta and directions set out in the following cases: (i) Union of India and Ors. Vs. Indo Afghan Agencies Ltd., (1968) 2 SCR 366; (ii) Judgment dated 02.02.2012, passed in: WP(C) 423/2010, titled: Centre for Public Interest Litigation and Ors. Vs. Union of India and Ors. (2G case where the court ordered an auction to be carried out); and (iii) The CAG and Anr. Vs. K.S. Jagannathan, AIR 1987 SCC 537. 22. In this context, I may only quote the following observations contained in paragraph 20 of the judgment in the case of the CAG and Anr. Vs. K.S. Jagannathan which are both instructive and illustrative of the situations in which a court can issue a writ of mandamus:- ..There is thus no doubt that the High Courts in India exercising their jurisdiction under Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion malafide or on irrelevant considerations or .....

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..... of the Appellate Order had been complied with or not is not enough to deter the Courts from characterising the function as ministerial. On the facts and in the circumstances of this case by a writ of mandamus the said authority must be directed to perform its function.... 22.2 The Division Bench Judgment of this court in DRI Vs. Corporate Aircraft Funding Company LLC, has however, construed the power of the DGCA under Rule 30 of the Aircraft Rules, as an enabling power. Being a judgment of the Division Bench, concerning the issue at hand, it would have to be followed both as a matter of propriety and in law, having regard to the principle of judicial hierarchy. 22.3 This aspect of the matter, however, need not detain me any further as, Rule 30 stands amended with the insertion of sub-rule (7) in Rule 30 of the Aircraft Rules. The relevant amendments brought about in Rule 30, vide notification no. GSR 78(E) dated 09.02.2015, issued by Ministry of Civil Aviation read as follows :- ...3. In Rule 30 the said rules, - (a). In sub-rule (6), in clause (iv), for the words is not in force; or , the words has expired or has been terminated in accordance with terms of lease or .....

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..... n terms of the said Article. 23.2 This argument, advanced by Mr Srinivasan, stems from Article X(6) of the Protocol. A careful perusal of Article X of Protocol would show that it deals with modification of provisions regarding relief pending final determination. The clauses (1) to (5) of Article X, give a clear indication that they refer to the court route for seeking relief as provided in Article 13 of the Convention, as against IDERA route, as provided in Article IX of the Protocol. 23.3 Therefore, once a creditor, takes recourse to the provisions of Article 13 of the Convention for seeking relief pending final determination by the court, and such relief, is granted by the court, then the registry authority and other administrative authorities (as applicable), in a contracting State, are required to make available the specified reliefs as sought and granted by the court, within five working days. 23.4 A confusion has arisen on account of the fact that both, in the heading concerning clause (6) of Article X of the Protocol, as well as in the body of the provision, there is a reference to Article IX(1) of the Protocol. This appears to be incongruous, as Article X, relates .....

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..... ntary.... 23.5 Therefore, the argument of Mr Srinivasan, based on the provisions of Article X(6) of the protocol, are not sustainable. However, this will not have any impact on the aspect of de-registration by the DGCA, in view of my discussion hereinabove. 24. The other submission advanced on behalf of Spicejet, which is that the petitioners having initiated action in the English Court, in which, amongst others reliefs sought, includes the relief of de-registration, and therefore, the instant petition is not maintainable, in my view, is also untenable. The jurisdiction of this court, if rightly invoked, cannot be ousted merely on the ground that the petitioner has instituted an action in the English Court. Spicejet has not filed any proceedings in this court, in the nature of an anti-suit injunction. The fact that the aircraft objects are registered with the DGCA, and have their particulars mentioned in the ICAR, is not in dispute. Therefore, in my opinion, this court would have jurisdiction to deal with the captioned petitions. 25. This brings me to one yet another argument advanced on behalf of the respondents. The argument is that, money, in the form of cash security .....

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..... 46. Article 31. GENERAL RULE OF INTERPRETATION: 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. 2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: (a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty; (b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. 3. There shall be taken into account, together with the context: (a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) Any relevant rules of international law applicable in the relations between the parties. 4. A special meaning shall be .....

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..... ated therein. Entitlement to termination of the subject lease agreements is not an ingredient of Article IX of the Protocol. All that the petitioners have to demonstrate qua this aspect, is that, they have exercised their right under IDERA, and thus, proceeded to terminate the subject lease agreements. There is no dispute that this aspect has been taken care of by the petitioners. The submission is, accordingly, rejected. 27. I am also not impressed by the submissions advanced on behalf of the Spicejet that de-registration and/or re-possession of the aircraft objects would impinge upon public interest. As indicated above, there is as much if not more public interest in ensuring that treaty obligations are honoured, and that, the parties adhere to their respective contractual obligations. The very fact that India has ratified the Convention and Protocol, gives rise to the presumption that it has been done in, the larger public interest, as against a narrow interest of one particular airline. The argument that passages have been booked with Spicejet, does not improve the case put forth by the respondents as this is a risk that every unsecured creditor will take vis-a-vis its trans .....

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