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TMI Blog2023 (7) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... lt has occurred and the Petitioners have terminated the Lease Agreement(s) and commenced the process of de-registration of the Aircraft, such Aircraft cannot be flown. The purport of Rule 30 (7) of the Aircraft Rules has been dealt with by a Coordinate Bench of this Court in the AWAS 39423 IRELAND LTD., WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED VERSUS DIRECTORATE GENERAL OF CIVIL AVIATION ANR. [ 2015 (3) TMI 1427 - DELHI HIGH COURT] wherein after analysis of the provisions of the Aircraft Rules, this Court held that the Respondent/DGCA has to proceed in accordance with Rule 30 (7) of the Aircraft Rules and the Court cannot interfere even on grounds of equity; keeping in mind, the protection of private business transaction law in India, international conventions such as Cape Town Convention must be followed; the disputes qua validity of the termination of the lease are not relevant for the purposes of deregistration and the contention that public interest will be impinged if the deregistration is granted is not a valid ground for refusal. The argument which is raised by the Respondents qua adjudication of the disputes before the NCLT and that this Court under its inher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84/2023, W.P.(C) 7369/2023 and CM Nos. 28705-28706/2023, W.P.(C) 7663/2023 CM APPL. 29679-29680/2023, W.P.(C) 7773/2023 CM APPL. 29997-29998/2023, W.P.(C) 7774/2023 CM APPL. 30005-30006/2023, 32445/2023, W.P.(C) 8088/2023 CM APPL. 31155-31156/2023 For the Petitioner Through: Mr. Satvik Varma, Senior Advocate with Mr. Ravi Nath, Mr. Ankur Mahindru, Mr. Rohan Taneja, Mr. Aditya Kapur, Mr. Tanveer Oberoi, Mr. Tushar Mudgil, Mr. Mehul Jain, Mr. Tarun and Mr. Ankit, Advocates. Mr. Dayan Krishnan, Senior Advocate Mr. Mukul Rohtagi and Mr. Arun Kathpalia, Senior Advocates with Ms. Meghna Rajadhyaksha, Ms. Medha Sachdev, Mr. Rishabh Jaisani, Ms. Salonee Kulkarni, Ms. Riya Basu, Mr. Ajay Kumar, Mr. Kshitij Wadhwa, Mr. Aditya Dhupar and Ms. Diksha, Advocates. Mr. Ajay Kumar, Ms. Anchal Nanda, Mr. Hetram Bishnoi, Advocates. Mr. Rajiv Nayyar, and Mr. Amit Sibal, Senior Advocates with Ms. Marylou Bilawala, Mr. Premaya Goyal, Ms. Sharleen Lobo, Ms. Neetika Sharma, Mr. Girish Shankar, Mr. Chiranjin Sharma, Mr. Vinamra Kopariha and Mr. Mayank Bharghav, Ms. Apoorva Kaushik, Advocates Mr. Gaurav Mitra and Mr. Pai Amit with Mr. Nimish Vakil, Ms. Bhavna Duhoon Mr. Rahat Bansal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Aircraft Rules ]. BRIEF FACTS: 3. The facts, being similar in all the Petitions, have been collated and are briefly set forth below: 3.1 Separate Lease Agreement(s) were entered between the Respondent/Go Air and the Petitioners to lease one or more Aircraft to the Respondent/Go Air, on the terms and conditions as set forth therein [hereinafter referred to as the Lease Agreement(s) ]. In all, the Respondent/Go Air had leased 30 Aircraft from these 8 Petitioners. 3.2 For ease of reference, certain relevant details qua the Petitioners are reproduced in the table below: S.No Petition No. Case Title and Interim Application Details Details of the Aircraft Leased Lease Agreement Date(s) IDERA Date(s) Lease Agreement Termination Date(s) Date of De-registration Application lodged with DGCA Whether an Appeal has been filed in the NCLAT? 1 WP(C) 6569/2023- ACCIPITER INVESTMENTS AIRCRAFT 2 LTD V UOI CM APPL. 25806/2023 FOR INTERIM RELIEF Airbus A320-214 MSN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63/2023- DAE SY 22 13 IRELAND DESIGNATED ACTIVITY COMPANY Vs. UOI ORS CM APPL. 29679/2023 FOR INTERIM RELIEF 1. Airbus A320- 271N MSN 11160 IRM VT -WDD 08.08.22 [for both aircraft] 18.01.23 [for both aircraft] 02.05.23 and 04.05.23 05.05.23 NO 2. Airbus A320- 271N MSN 11052 IRM VT -WDA 6 WP(C) 7773/2023- SFV AIRCRAFT HOLDINGS IRE 9 DAC LIMITED Vs. UOI THROUGH THE MINISTRY OF CIVIL AVIATION ORS. CM APPL. 29997/2023 FOR INTERIM RELIEF Airbus A320 -271N MSN 11130 IRM VT-WDC 05.08.22 11.10.22 03.05.23 05.05.23 YES, appeal filed Co App (AT) (Ins) No. 603 of 2023 7 WP(C) 7774/2023- ACG AIRCRAFT LEASING IRELAND LIMITED Vs. UNION OF INDIA ORS. CM No. 32445/2023 FOR INTERIM RELIEF 1. Airbus A320-271N MSN 7594 IRM VT-WGI 16.11.17 [For all Aircraft] 26.07.18 02.05.23 04.05.23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber VT-WDB (together with all installed, incorporated or attached accessories, parts and equipment, the 'aircraft'). This instrument is an irrevocable de-registration and export request authorisation issued by the undersigned in favour of Eos Aviation 12 (Ireland) Limited ( the authorised party ) under the authority of Article XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment. In accordance with that Article, the undersigned hereby requests: i. recognition that the authorised party or the person it certifies as its designee is the sole person entitled to: a) procure the de-registration of the aircraft from the Indian aircraft register maintained by the Directorate General of Civil Aviation for the purposes of Chapter III of the Convention on International Civil Aviation, signed at Chicago, on 7 December 1944, and b) procure the export and physical transfer of the aircraft from India; and confirmation that the authorised party or the person it certifies as its designee may take the action specified in clause (i) above on written demand without the consent of the undersigne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.10 In the meantime, the Respondent/Go Air initiated proceedings before the NCLT, under Section 10 of the Insolvency and Bankruptcy Code, 2016 [hereinafter referred to as IBC ] for initiation of voluntary Corporate Insolvency Resolution Process [hereinafter referred to as CIRP ]. 3.11 By its order dated 10.05.2023, the NCLT admitted the Petition filed by the Respondent/Go Air and as a consequence of which a moratorium was imposed under Sub-Section (1) of Section 14 of IBC qua the Respondent/Go Air. 3.12 The Order dated 10.05.2023 was challenged in Appeal before the National Company Law Appellate Tribunal [hereinafter referred to as NCLAT ]. By its order dated 22.05.2023, the NCLAT, inter-alia, upheld the order of the NCLT. 3.13 In the meantime, by letters dated 11.05.2023 and 12.05.2023, the Petitioners were informed by the Respondent/DGCA that the Deregistration Application has been rejected/application cannot be processed in view of the order dated 10.05.2023 passed by the NCLT, New Delhi. Aggrieved, the present Petitions have been filed. SUBMISSIONS OF THE PETITIONERS: 4. Following were the brief submissions made by learned Counsels for the Petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate General of Civil Aviation Anr. 2015 SCC OnLine Del 8177, it is submitted that the deregistration of an aircraft is only a ministerial act . The relevant paragraphs of the Awas case relied upon are below: 21.1 As would be evident upon a careful reading of the proviso to sub-rule (1) that, in case of a leased aircraft, the COR should include inter alia the factum of the validity of the lease. In the cases under discussion, the lease is no longer valid; the lease agreements having been terminated. 21.2 The Central Government, which in this case, would be the DGCA, upon termination of the lease is required to cancel the registration of an aircraft, inter alia, under clause (iv) of sub-rule (6) of Rule 30 if, the lease is not in force. . 22.1 In my opinion, 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 discre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een prayed that the directions be passed against the Respondent/Go Air, to not, in any manner, operate and fly the Aircraft and permit inspection by the Petitioner or their Authorised Representatives. 4.2 Submissions of Mr. Satvik Verma, Senior Advocate: (i) Mr. Verma submits that the Respondent/DGCA has not challenged the applications of deregistration or the IDERA as filed by the Petitioner, which clearly enunciates that the all the documentation in respect to the deregistration is in consonance with the laws. Thus, Respondent/DGCA has no right to delay the procedure of mandatory deregistration and within 5 working days of receiving the Deregistration Application, the Aircraft must be deregistered. He further submits that the deregistration of an Aircraft is a right of a Lessor and if the deregistration is not allowed, the Aircraft and the Aircraft s Engines will not be maintained. (ii) Mr. Verma further also emphasises para 26 of the Awas case to submit that once an IDERA has been submitted, the Respondent/DGCA has no option other than to deregister the Aircraft as below: 26. In passing, a reference was also made to the fact that the issue with regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y maintenance on an urgent basis. (iii) Mr. Nayyar further submits that unless immediate steps are taken for operation and maintenance of all the Aircrafts including MSN 6072, irreparable loss and damage shall be caused to the Petitioner. (iv) Lastly, it is submitted that the lease in all 20 aircrafts owned by the Petitioners have been terminated either by termination or by the efflux of time and what is paramount in the lease conditions, is on termination, no other subsisting right remains with the lessee. Relying on Sub-Rule 6(iv) of Rule 30 of the Aircraft Rules and the Awas case, Mr. Nayyar submits that once the lease in respect of an Aircraft is terminated or has expired, the registration of such Aircraft, in any event, is required to be cancelled by the Respondent/DGCA in accordance with law. 4.4 Submissions of Mr. Amit Sibal, Senior Advocate: (i) Mr. Sibal submits that the Respondent/DGCA is in breach of its administrative duty under Cape Town Convention. Mr. Sibal also relies on the judgment in the Awas case, to submit that the act of deregistration is a ministerial act which is to be carried out by the Respondent/DGCA under the provisions of the Aircraft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LAT order is misplaced. 4.6 Submissions of Mr. Mukul Rohtagi, Senior Advocate: (i) Mr. Rohtagi seeks to rely on Section 18(f) of IBC to submit that the moratorium can be imposed on an asset owned by the Corporate Debtor, but the Interim Resolution Professional/Resolution Professional [hereinafter referred to as IRP or RP (as the case may be)] has no right to take over the assets of a third party such as the Aircraft(s) of the Petitioners. (ii) Relying on the Explanation (a) to Section 18 of the IBC, it submitted that the term assets as defined in Section 18 does not include assets owned by a third party held under trust or contractual agreement. The Aircraft are assets belonging to the Petitioners previously held under contractual agreement with Respondent/Go Air, and pursuant to the termination, no rights remain that can be exercised by an IRP/RP. Hence, the provisions of Section 18 are not applicable to the Aircraft under Lease Agreement. 4.7 Submissions of Mr. Gaurav Mitra, Advocate: Mr. Mitra, submits that the termination of Lease Agreements and the filing of Deregistration Application of the Aircraft was done, prior to the public announcement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner or lessor whether such property is occupied by or in possession of the Corporate Debtor. Reliance in this regard is inter-alia placed on the extract judgment (paragraph 23) of the Supreme Court in the case of Rajendra K. Bhutta vs. MHADA AIR 2020 SC 3274 to state that the Aircraft at present are in the possession/occupation of Respondent/Go Air and hence the moratorium as imposed cannot be breached: 23. The conspectus of the aforesaid judgments would show that the expression occupied by would mean or be synonymous with being in actual physical possession of or being actually used by, in contradistinction to the expression possession , which would connote possession being either constructive or actual and which, in turn, would include legally being in possession, though factually not being in physical possession. Since it is clear that the joint development agreement read with the deed of modification has granted a licence to the developer (corporate debtor) to enter upon the property, with a view to do all the things that are mentioned in it, there can be no gainsaying that after such entry, the property would be occupied by the developer. (vi) Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r its challenge. 5.3 Submissions on behalf of Mr. Ramji Srinivasan, Senior Advocate: (i) Mr. Srinivasan, submits that the registration of an Aircraft is mandatory for it to be used and flown, and that the same is important for the Corporate Debtor, in this case the Respondent/Go Air, to treat the Corporate entity as a going concern . (ii) It is also submitted that termination of the Lease Agreement(s) would completely eliminate the existence of the Corporate Debtor, and hence all proceedings should be kept in abeyance till the IBC proceedings are finally adjudicated. Reliance is placed on the judgment of a Division Bench of this Court in Tata Steel BSL Ltd. v. Venus Recruiter (P) Ltd. 2023 SCC OnLine Del 155. Paragraph 62 of the Tata Steel case is reproduced below: 62. In light of the aforesaid, it becomes evident that the phrase arising out of and in relation to is to be given wide import. Therefore, the Ld. Single Judge erred in holding the writ petition was maintainable. An appeal ought to have been preferred by Respondent No. 1 before the NCLAT under Section 61 of the IBC and the NCLAT itself was the appropriate forum to decide the controversy posed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections of a Court and once the NCLT order was passed, the procedure for deregistration could not continue. In this regard, Ms. Gosain seeks to rely on Section 238 of the IBC to submit that the IBC has an overriding effect on all other laws and in the event of any inconsistency, the IBC is to prevail. It is contended that Respondent/DGCA is neither supporting the Lessor nor the Lessee, they are just performing their duties in accordance with law. 7. REJOINDER SUBMISSIONS ON BEHALF OF THE PETITIONERS: 7.1 In Rejoinder, learned Senior Counsel(s): Mr. Mukul Rohtagi, Mr. Rajiv Nayyar, Mr. Dayan Krishnan, Mr. Arun Kathapalia and Mr. Amit Sibal, made submissions as below: (i) The inherent powers of this Court under Article 226 cannot be curtailed by the IBC or other statute. In any event, the Petitioners in W.P.(C) 7214/2023 and W.P. (C) 7663/2023 have only approached this Court under the Writ Jurisdiction and did not approach the NCLT/NCLAT. (ii) The termination of the Lease Agreement is not a result of the Insolvency of the Respondent/Go Air, but it is because of the repeated defaults in payment of lease rentals in respect to the Aircraft leased to Respondent/Go Air. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should perform its obligatory duties by de-registering the Aircrafts. ANALYSIS: 8. I have heard the learned Senior Counsels and learned Counsels appearing for the Parties. The prayers made in the Petitions which are pending adjudication are similar to the extent that all 8 Petitioners pray for issue of a Writ of mandamus to Respondent/DGCA to direct deregistration of the respective Aircrafts owned by them [the details of which are set forth in the paragraph 3.2 above], and also to facilitate the export and physical possession of these Aircrafts. 8.1 Pending disposal of the present Petitions, the Petitioners have prayed that they be granted interim relief, with a view that these Aircrafts which are no longer in a position to be operational or used for flying, be preserved. It is contended by the Petitioners that if the mandatory maintenance and preservation tasks are not regularly carried out, the Aircraft will become unworthy of flying and as such, the Petitioners will incur losses to the tune of several hundred thousand US Dollars. 8.2 Although, the parties before the Court have almost substantially argued the matter, the Court by this judgment, is deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in default of its rental payment obligations under the Lease Agreements qua all 8 Petitioners. 10.4 Amongst the remedies available to a Lessor, pursuant to an event of default as provided under the Lease Agreement(s), is de-registration by the Aviation Authority, i.e., the Respondent/DGCA and export of the Aircraft out of the Respondent/GoAir's jurisdiction. Clause 13.1.3 of the Lease Agreement(s)in this regard provides as follows: 13.1.3 Specific Remedies Without limiting the generality of the foregoing Lessor will have the right: ...(4) without need of any consent, authorization or action of Lessee, to cause the Aircraft to be deregistered by the Aviation Authority, and to be made ready for export and to be exported out of the country where the Aircraft is for the time being situated and the Lessee Jurisdiction, and to cause all rights of Lessee in respect of the Aircraft and this Lease Agreement and each other Operative Document under or in connection with or resulting from the registration of the Aircraft or the recordation of the Operative Documents with the Aviation Authority or otherwise, to be terminated and extinguished, and thereafter to notify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BC and that the provisions of Section 14 of the IBC cannot be made applicable in such cases. (iii) Once a Lease is terminated, the lessor [Petitioners herein] are in de facto possession of the Aircraft and as such, the Aircraft is not operational in terms of the Aircraft Rules. However, there then is an imminent danger to the very valuable asset of the Petitioners being irreparably damaged on account of non-conduct of the maintenance activities. (iv) The five working days qua Deregistration Application would expire on 09.05.2023 in the matters where Petitioners had sent the notice for termination on 02.05.2023 and on 10.05.2023, where the Termination Notice was sent on 03.05.2023. However, the Respondent/DGCA has failed to comply with the provisions of the Aircraft Rules up to the date of filing of the present Petitions. 13. The Respondent/DGCA while contesting the Petitions has, in sum, submitted that it is unable to deregister the 30 Aircraft of the Petitioners on account of the moratorium as imposed by the NCLT by its order dated 10.05.2023 and that it has informed the Petitioners of the same inter-alia by its communication dated 12.05.2023. 14. The Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts of the Awas case in this regard below: 22.4 A bare reading of the aforesaid would show that with the insertion of sub-rule (7) in Rule 30, the doubt, if any, as to whether the DGCA had any discretion in the matter has got removed. Upon the creditor fulfilling the conditions prescribed in clause (i) and (ii), of sub-rule (7), of Rule 30, the DGCA is mandatorily required to cancel the registration. 22.4[sic:22.5] Therefore, keeping in mind the aforesaid, in my view, a mandamus shall issue to the DGCA to act in a particular manner, as the conditions prescribed for acting in that manner, as required by law, stand fulfilled . Any other direction would only frustrate the object and purpose with which the amendment has been brought about in Rule 30. I am, thus, persuaded to direct the DGCA to de-register the aircraft objects, which are subject matter of the captioned writ petitions. ..... 25.4 There is another aspect, which has to be kept in mind, while dealing with such like matters; which is that, a court ought not to proceed in a manner which retards funnelling of much needed private finance for business transactions in India. This is not to say w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate to honour its commitments under the Convention and the Protocol. [Emphasis supplied] 16. Under sub-section (4) of Section 14 of IBC, an order for moratorium has effect from the date of such order till the completion of the CIRP as follows:- 14. Moratorium (1) . (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. [Emphasis supplied] 16.1 There is no dispute that the order of moratorium in this case was passed by NCLT on 10.05.2023, hence, it came into effect from 10.05.2023. 16.2 The Respondent/Go Air has relied upon on the Judgment in the case of Rajendra K. Bhutta case to argue that Section 14(1)(d) of the IBC prohibits recovery of any property where such property is occupied by or in posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. 27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with... 16.5 As discussed hereinabove, the provisions qua registration/deregistration of an Aircraft are inter-alia subject matter of the Aircraft Act and Aircraft Rules framed thereunder and the Petitioners have approached this Court alleging on a failure of the Respondent/DGCA to comply with these provisions and are well within their rights to do so. 16.6 The NC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Procedure to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer..... [Emphasis supplied] 17. The 30 Aircrafts are assets owned by the Petitioners which were previously under a contractual agreement i.e., the Lease Agreement(s) with the corporate debtor. Explanation (a) to Section 18 of IBC excludes assets owned by a third party in trust or contractual agreement as follows:- 18. Duties of interim resolution professional. (1) The interim resolution professional shall perform the following duties, namely (a) . .... (g) . Explanation . For the purposes of this[section], the term assets shall not include the following, namely (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit Petitions; (iii) Respondent/GoAir, its directors, employees, agents, officers and or representatives or the IRP/RP(s) or any person acting on their behalf, are hereby restrained from removing, replacing, taking out any accessories, parts, components or spares, etc. or any relevant operational or other Manuals /records, documentation from any of the 30 Aircraft, except with prior written approval of the Lessor of such Aircraft; (iv) The following additional directions shall be applicable to Aircraft MSN 6072: Respondent/DGCA shall permit the Respondent/RP to carry out the mandatory maintenance/engine runs of this Aircraft until its de-registration. 21. These directions are passed qua the interim applications and shall not impact the merits of these Petitions. 22. Interim Applications: CM Nos. 25806/2023, CM Nos. 26011/2023, CM Nos. 30784/2023, CM Nos. 28705/2023, CM Nos. 29679/2023, CM Nos. 29997/2023, CM Nos. 32445/2023 and CM Nos. 31155/2023 are accordingly disposed of. 23. Pleadings in the Writ Petitions being W.P.(C) Nos. 6569/2023, W.P.(C) Nos. 6626/2023, W.P.(C) Nos. 7214/2023, W.P.(C) Nos. 7369/2023, W.P.(C) Nos. 7663/2023, W.P.(C) Nos. 7773/2023, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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