NCLAT gives a third lessor the right to inspect Go First aircraft

New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Thursday granted Bluesky 19 Leasing Company Ltd, a lessor of Go First, the right to inspect its aircraft, making it the third lessor to secure this right. The decision comes despite the resolution professional’s argument that a Delhi High Court order on 4 September had already granted inspection rights to lessors.

NCLAT’s decision is based on its 18 August order in the Engine Lease Finance BV case, which was also applied in the case of another aircraft lessor, Jackson Square Aviation Ireland Ltd, granting it inspection rights.

All three lessors appealed the NCLT order from 26 July that allowed go First to operate the leased aircraft on the grounds that the Directorate General of Civil Aviation (DGCA) had not yet deregistered the aircraft.

NCLAT on 18 August allowed engine lessors to carry out inspections and modified the NCLT order as it disagreed with the portion that restricted lessors from inspecting the airline’s assets. These decisions by NCLAT are likely to hinder Go First’s efforts to resume operations. The airline has been grounded since May.

Go First suffered another setback on Wednesday, when the Ministry of Corporate Affairs announced that certain provisions of the Insolvency and Bankruptcy Code (IBC) would not apply to aircraft, engines, and related parts. Specifically, it said, Section 14(1) of the IBC, which imposes a moratorium on insolvency pleas, would not apply to “transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters”. The lessors are expected to use this amendment in tribunals and courts to repossess their assets from the airline. However, further delays are expected due to changes in the composition of the NCLT bench that had been hearing the matter.

Go First’s future also remains uncertain in the Delhi High Court, where a single bench is currently hearing all parties involved in the deregistration of the aircraft in a case initiated by the lessors. The court has reserved its judgement in the maintenance case, initiated by three lessors, and is expected to issue a ruling in the coming week.

Go First filed for insolvency due to financial difficulties linked to faulty Pratt & Whitney engines. The NCLT accepted its plea on 10 May, leading to the suspension of the airline’s board.