Go First Lessor Receives NCLAT Permission To Inspect Leased Aircraft

Disagreeing with a portion of the NCLT's ruling that restricted the lessor from inspecting the engines, the NCLAT had issued its own directive to schedule an inspection within 10 days.

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The National Company Law Appellate Tribunal (NCLAT) on Thursday granted permission to Ireland-based lessor Jackson Square Aviation Ltd to inspect its aircraft leased to cash-strapped Go First.

This decision follows a similar observation made in the case of Engine Lease Finance BV – the first lessor to approach the tribunal – on August 18 wherein it had modified the National Company Law Tribunal (NCLT)'s July 26 order to permit the engine lessor to carry out inspection of four engines of aircraft leased to Go First.

Disagreeing with a portion of the NCLT's ruling that restricted the lessor from inspecting the engines, the NCLAT had issued its own directive asking the Resolution Professional (RP) to schedule an inspection within 10 days.

Favouring Go First, the NCLT had refused to restrain it from using leased aircraft for its operations as they are essential for the airline to keep going. Challenging the NCLT’s order, Jackson filed the plea against the RP of the airline, Shailendra Ajmera.

Earlier this month, the high court had said that scheduled maintenance does not encompass the operation of flights, and it restrained troubled Go First to continue with maintenance flights.

A bench of Justice Tara Vitasta Ganju said that the RP hasn't shown any sense of urgency or an immediate serious threat to the aircraft that would necessitate the RP to suddenly and unexpectedly operate them without prior notice.

"The respondent no.9/ RP of Go Airlines has also not been able to show any urgency or any grave imminent threat to these aircraft to suddenly and without any prior notice, compel the respondent no.9 RP to fly these aircraft," she had said.

"Prima facie, the term – scheduled maintenance cannot be understood to include flying the aircraft even if it is a non-commercial flight. Thus, respondent no.9/ RP of Go Airlines cannot be permitted at this stage, to continue with these handling/maintenance flights,” the judge had added.

The high court rejected the argument put forth by the RP as "misconceived", where the RP claimed that Go Airlines had operated two out of the 10 aircraft, stating that these flights were actually part of the scheduled maintenance for an aircraft.

One of the lessors -- SMBC Aviation Capital Ltd -- filed an application submitting that disregarding the earlier directions of the court, the RP has flown two aircraft owned by the petitioners without court’s permission.

On July 5, Justice Ganju had allowed aircraft lessors of Go First to inspect their aircraft at least twice a month and carry out maintenance. The plea argued that as per the above mentioned order, which directed that once the process of deregistration of aircraft has begun, the planes cannot be flown.

Counsel for the RP argued that there was an urgent need to make the aircraft flight ready according to the Resumption Plan approved by the Directorate General of Civil Aviation (DGCA) on July 21, and the aviation regulator also required the airline to conduct handling or maintenance flights satisfactorily.

Justice Ganju, who had, on July 28, directed that status quo be maintained in respect of handling/non-revenue flights of the petitioner lessors’ aircraft till August 3, extended the interim order till further orders.

On the other hand, senior advocate Ramji Srinivasan appeared for the RP and said that they have preferred an appeal before the Supreme Court against the division bench's July 12 order refusing to interfere with Justice Ganju's July 5 order allowing lessors to carry out maintenance work of their aircraft on lease.