The National Company Law Tribunal (NCLT) has granted relief to bankrupt Go First, allowing the grounded Airline to utilize leased Aircraft as it prepares to resume operations.

In an order issued on Wednesday, NCLT said that the civil aviation regulator Directorate General of Civil Aviation (DGCA), has not deregistered the aircraft, which means that they are available to the airline to resume operations.

“Therefore, as long as the aircraft/engines are registered, they can be used for operating or flying to keep the corporate debtor (Go First) as a going concern, however, within the safeguards/safety norms prescribed by the regulators,” stated the order on the plea by lessors against the airline company.

The lessors had approached NCLT to deregister the aircraft leased to the airline.

This order clears the way for the resumption of flights by Go First, which received DGCA’s approval last week. Last week, the aviation regulator granted conditional approval for Go First to resume flights with 15 aircraft, or 114 daily flights. The low-fare airline may resume scheduled flight operations on the availability of interim funding and the approval of flight schedule by the DGCA, the regulator said in a statement.

NCLT has also stated that there is no need for the lessors to inspect the aircraft as the court, in its 15 June order, has already directed resolution professional Shailendra Ajmera to maintain the aircraft.

“…in the instant case, allowing inspection would only act as an impediment to the effective discharge of the duties of the resolution professional which, inter alia, includes the protection and maintenance of the engines at the prescribed levels of efficiency/safety, which would be necessary to keep the corporate debtor as a going concern,” the order further said.

The court further reiterated that the resolution professional has the responsibility to maintain the property, aircraft, and engines at the highest levels of efficiency and safety. The court recalled that the resolution professional has also stated earlier that a substantial amount has been set aside by the committee of creditors for restoring the functioning of the business of the airline as well as for the payment of due lease rent to the lessors.

“Moreover, the lease of the aircraft is a service that is critical to protecting and preserving the value of the corporate debtor and to managing its operations as a going concern. Therefore, in light of (the) above observations, we do not find sufficient cause to rely on the affirmations made by the applicants (lessors),” NCLT said.

Legal experts said the lessors have the option of moving NCLAT. “Against an order of the NCLT (the Adjudicating Authority under IBC), an appeal lies before the NCLAT. Therefore, for these lessors, one recourse available to them is to approach NCLAT. However, considering that this order has been passed to allow Go First to carry out commercial flying of aircraft with a view to keep Go First as a going concern, it is unlikely that NCLAT will interfere with this order,” said lawyer Shashank Agarwal

The NCLT order also pointed out that the Emergency Arbitrator at the Singapore International Arbitration Centre has already passed emergency awards directing Pratt & Whitney, the engine suppliers, to supply serviceable spare leased engines to the Corporate Debtor in relation to its operations.

Go First on Tuesday also conducted a test flight in Mumbai after being suspended since filing for bankruptcy in May. The airline conducted a test flight via VT-WGD Airbus A320neo aircraft at the Mumbai airport, an official aware of the development said.

“The NCLT strictly applied the moratorium provisions under IBC and rejected the interim reliefs sought by the lessors on the ground that during the moratorium period, the company cannot be dispossessed of its assets,” said Smiti Tewari, partner, Khaitan Legal Associates.

The acceptance of the revised resumption plan of the airline to restart flights with 15 aircraft is subject to the outcome of the writ petitions or applications pending before the Delhi high court and the National Company Law Tribunal (NCLT), the regulator had said.

“The sale of tickets shall be commenced only after the approval of the flight schedule by DGCA. The resolution professional shall submit information as sought by DGCA from time to time,” the order stated.

DGCA conducted a special audit of the airline during 4-6 July to assess safety-related aspects of the airline and check compliance of Go First with the requirements to hold an air operator certificate. Under the audit, DGCA also undertook a physical verification of the arrangements made by the airline for the resumption of flights.

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