Go First Resolution Professional should have waited for Delhi HC judgment: Legal experts on Supreme Court setback

Following the Supreme Court’s refusal to interfere in the Delhi High Court order in the low-cost carrier (LCC) Go First issue, legal experts have said the Interim Resolution Professional (IRP) must wait for the lower court’s final judgment on the matter.

On July 5, the single-judge Bench of Justice Tara Vitasta Ganju directed the civil aviation regulator Directorate General of Civil Aviation (DGCA) and the concerned airport authorities to permit the lessors to inspect the 30 leased aircraft with the Mumbai-headquartered LCC. However, the insolvency court National Company Law Tribunal (NCLT), New Delhi, in an order on July 26 allowed Go First to use the aircraft for which leases were terminated by lessors on the grounds that the aviation regulator Directorate General of Civil Aviation (DGCA) had not deregistered the aircraft, adding to the confusion.

The NCLT-appointed Interim Resolution Professional (IRP challenged the Delhi HC order in SC claiming the proceedings by lessors to repossess their aircraft and other equipment would interfere with the bid to revive the airline.

“With the Supreme Court’s decision to not interfere in the matter at this stage, the focus is now solely on the single bench of the Delhi High Court, wherein most of the lessors have concluded their submissions and the matter is now listed for hearing on August 9 for Go First’s RP and DGCA to make their submissions,” said Salil Arora, the founding partner of law firm AviLeague Partners.

Thus, the appeal was against an order that is currently pending before the Delhi High Court. Legal experts also said while the IRP’s concerns were understandable, it should first wait for the final outcome of the high court hearing.

“While the efforts by the RP to claim the aircraft for the resolution process are genuine and in line with the provisions of the Insolvency and Bankruptcy Code (IBC), however, in the facts and circumstances of this case, such provisions do not apply. Nevertheless, as the matter is pending, the IRP must wait for the final outcome,” averred Shashank Agarwal, a Delhi High Court lawyer.

Others said that the final judgment in the matter would have repercussions for businesses such as real estate developers, construction companies and other infrastructure sector players operating with an asset-light model.

“The concept of a going concern, which is the bedrock for the revival of an ailing unit will be put to the test. Furthermore, this case would also lay the path for the companies whose assets belong to third parties and those who are asset light,” Amir Bavani, founder of the Hyderabad-headquartered law firm AB Legal, said.

In the interim, the question that continues to beg an answer is which of the two conflicting orders of the NCLT and Delhi High Court on the inspection and maintenance of the aircraft should prevail.

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