Moratorium notification will apply prospectively: Go First

NEW DELHI: The resolution professional (RP) of the cash-strapped Go First airline on Friday told the Delhi High Court that the October 3 government notification exempting transactions related to aircraft and engines from mandatory moratorium under the Insolvency and Bankruptcy Code will apply prospectively.

Questioning the jurisdiction of the HC to decide the issue, it also said that the “retrospective effect” of the notification, as clarified by the Directorate General of Civil Aviation (DGCA), has to be decided by the National Company Law Tribunal.

The DGCA in its filing to the HC had clarified that Go First’s leased aircraft and engines can be deregistered and returned to lessors, severely denting the bankrupt airline’s revival prospects.

Senior counsel NK Kaul, appearing for the RP, told Justice Tara Vitasta Ganju that the government circular does not change anything. “It is not retrospective, but prospective in effect… IBC law does not provide for any retrospective application. For a clarification, there has to be something in the Act itself. Clarificatory is something when seeds are sown and later some confusion occurs about something. And just a clarification can’t be exempting aircraft from rigours of moratorium,” he argued, while opposing lessors’ pleas asked the DGCA to immediately deregister and return their engines and aircraft leased to the airline.

The RP further pointed out that if assets of an airline are its engines and aircraft and “if these get dissipated, how can a corporate debtor be revived” since it will have no takers. The lessors, however, said that “nothing survives” after the DGCA’s clarification.

“Deregistration should be ordered right now….we are not claiming anything under IBC or from the RP. Dispute is with DGCA,” they added.The lessor had terminated the lease agreement of its aircraft with Go First on May 2. Subsequently, it sought the DGCA’s nod for deregistration of its leased aircraft.


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