The amendment in the insolvency law that exempts aircraft objects from the ambit of moratorium will be applicable retrospectively, according to the Directorate General of Civil Aviation (DGCA).
The exemption under the Insolvency and Bankruptcy Code (IBC) came against the backdrop of various aircraft lessors launching legal battles to repossess planes leased to the grounded Go First, which stopped flying since early May, and is undergoing an insolvency resolution process under the IBC.
On October 3, the corporate affairs ministry, through a notification, exempted aircraft objects registered in the international registry from the applicability of the moratorium under the IBC.
In a short affidavit filed before the Delhi High Court, the DGCA has said the notification should apply to pending cases as well.
"It is submitted that the executive's notification being procedural and a necessary adjunct to a section in legislation, i.e., section 14(1) of IBC in this case, it needs to be given effect from the date on which the section comes into force.
"As such, the above-mentioned Notification was issued u/s 14(3) of the IBC 2016, and would have to be considered to have a retrospective effect," the aviation regulator said.
The regulator made the submission to the court with respect to a case related to Go First.
However, DGCA said that since Go First's case is pending before the court, it "shall await for the appropriate direction of this court before proceeding in the matter."
"... the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters," as per the notification dated October 3.
Section 14 of the IBC deals with the power of adjudicating authority (NCLT) to issue a moratorium when admitting a company into the insolvency resolution process.