India’s NCLT Postpones Decision on Deregistering Go First Engines Amid Legal Complexities

The National Company Law Tribunal (NCLT) in India has delayed its decision on the deregistration of engines from the troubled airline Go First, with a new hearing date set for July 11. This decision comes as the tribunal takes time to assess a recent ruling from the Delhi High Court, which mandates the Directorate General of Civil Aviation (DGCA) to deregister all Go First aircraft and facilitate their return to lessors for export.

During the proceedings, counsel for the engine lessors—including notable firms such as SMBC Aero Engine Lease B.V., Engine Lease Finance B.V., and SMBC Afro Engine Lease B.V.—argued that the deregistration of Go First’s aircraft should extend to their engines as well. This stance, however, hit a procedural snag as the Delhi High Court’s April 26 order did not explicitly cover engines, due to the absence of a petition by the engine lessors in that court.

The NCLT’s hesitation to issue a ruling without further review underscores the complex legal landscape of airline insolvency in India, particularly in cases that intersect with aviation regulation and creditor rights. The tribunal’s careful approach reflects its limited scope in insolvency matters, contrasting with broader procedural issues typically handled by other courts.

Adding to Go First’s woes, the DGCA is reportedly moving towards permanently revoking the airline’s local airport slots and international flying rights, following its suspension of operations and insolvency filing in early May 2023. According to India’s MoneyControl, the DGCA has already temporarily reassigned Go First’s slots for the 2024 Northern Summer and 2024/25 seasons to other carriers and is expected to make these changes permanent by month’s end.

The impending loss of valuable airport slots and international routes, governed by an 80% usage rule within a 12-month period, could significantly diminish the residual value of Go First. This development poses an additional challenge for the airline’s creditors and resolution professionals who are still exploring potential sale options.

As the situation unfolds, stakeholders are closely monitoring the evolving legal and regulatory landscape, which could set precedents for handling similar cases in India’s aviation sector in the future.