In 2012, Regulation 10 of the Airports Authority of India (Management of Airports) Regulations 2003 provided for a right in favour of the airport authorities to detain or stop the departure of an aircraft till the fees or charges were paid which specifically included current and accumulated debt. The unamended Regulation 10, read as under:

“10. Unless otherwise provided under the Act or by a general or special order in writing by the Central Government, the use of the movement area of Airport, by an aircraft shall be subject to payment of such landing, parking or housing fees or charges as are levied by the Authority from time to time. In the event of non-payment of the requisite fee or charges, the Competent Authority shall have a right to detain or stop departure of the aircraft till the fees or charges are paid to Authority, which may include the current and accumulated dues.”

Corporate Aircraft Funding Company LLC (“CAFC”) approached the Delhi High Court as the DGCA refused to de-register a Bombardier Challenger 300 aircraft bearing manufacturer’s serial number 20174 and Indian registration mark VT-RAK. CAFC had extended a loan to the owner of the aircraft and the mortgage conferred upon CAFC, the right to avail de-registration.

In this writ petition, CAFC challenged the refusal of the DGCA to de-register the aircraft due to, inter alia, the alleged evasion of customs duty by the operator.

The Ministry of Civil Aviation called a high-level meeting with the airport operators (re: the Kingfisher aircraft detention) and inter-alia after a detailed discussion, took the following decision:

“The concerned airport operators shall release all the de-registered aircraft to the respective owners/lessors immediately so that these aircraft can fly out of the country. They are at liberty to collect parking charges from the owners/lessors from the date of de-registration. In case any of these de-registered aircrafts are subject matter of any court case between the owners/lessors and the airport operator, then the airport operator would take action as per the decision of court.”

This meeting was held in light of an increasing amount of pressure from internal as well as external stake holders calling on India to honour its obligations under the Convention and Aircraft Protocol.

The Government of India issued a notification dated the 4^th August 2014 publishing a draft insertion of a new Rule 30(7) in the Aircraft Rules, 1937 (the “Rules”) which was thrown open for public comments. The draft Rule 30(7) read as follows:

“The registration of a leased aircraft registered in India in pursuance of sub-clause (iv) of clause (a) of sub-rule (2) may be cancelled by the Central Government, if an application is received from IDERA holder prior to expiry of the lease alongwith :

(i) original or notarised copy of the IDERA;

(ii) a certificate that all registered interests ranking in priority have been discharged or the holders of such interest have consented to the deregistration and export:

Provided that the deregistration of leased aircraft by the Central Government under this provision shall not affect the right of any entity thereof, or any inter-governmental organisation, or other private service provider in India to arrest or detain or attach or sell an aircraft object under its laws for payment of amounts owed to the Government of India, any such entity, organisation or provider directly relating to the services provided by it in respect of that object”.

As a consequence of the notification dated 4^th August 2014, by way of another gazette notification dated 9^th February 2015, the Rules were amended to include Rule 30(7) which read as under:

“The registration of an aircraft registered in India, to which the provisions of the Cape Town Convention or Cape Town Protocol apply, shall be cancelled by the Central Government, as provided in the Cape Town Protocol, if an application is received from IDERA Holder prior to expiry of the

lease along with: —

(i) the original or notarised copy of the IDERA; and

(ii) a certificate that all Registered Interests ranking in priority have been discharged or the holders of such interest have consented to the deregistration and export:

Provided that the deregistration of an aircraft by the Central Government under sub-rule (6) or sub-rule (7) shall not affect the right of any entity thereof, or any inter-governmental organisation, or other private provider of public services in India to arrest or detain or attach or sell an aircraft object under its laws for payment of amounts owed to the Government of India, any such entity, organisation or provider directly relating to the services provided by it in respect of that object ”.

The Court, while deciding the 2014 SpiceJet Dispute, further opined on Rule 30(7). The relevant extract of the judgement dated 19^th March 2015 is reproduced below:

“22.4 A bare reading of the aforesaid would show that with the insertion of sub-rule (7) in Rule 30, the doubt, if any, as to whether the DGCA had any discretion in the matter has got removed. Upon the creditor fulfilling the conditions prescribed in clause (i) and (ii), of sub-rule (7), of Rule 30, the DGCA is mandatorily required to cancel the registration. 

22.5 Therefore, keeping in mind the aforesaid, in my view, a mandamus shall issue to the DGCA to act in a particular manner, as the conditions prescribed for acting in that manner, as required by law, stand fulfilled. Any other direction would only frustrate the object and purpose with which the amendment has been brought about in Rule 30. I am, thus, persuaded to direct the DGCA to de-register the aircraft objects, which are subject matter of the captioned writ petitions.

25. This brings me to one yet another argument advanced on behalf of the respondents. The argument is that, money, in the form of cash security is available with the petitioners – which is, far in excess of what is claimed by them, and therefore, reliefs of the nature, including the relief of de-registration, sought for in the petition, ought not to be granted. 

25.1 This is an argument, which is, pivoted, if at all, on equity. For the record, the petitioners have disputed that the amount available with them is sufficient to tied-over the arrears payable to them, and the recurring rentals, which would add up on use of aircraft objects. The petitioners’ commercial sense, at least at this juncture, is that, continued engagement with Spicejet is not a viable proposition. The fact that an event of default has occurred, is not in dispute. The petitioners’ right to seek remedies, both under the Convention and Protocol, have got triggered. The court, therefore, cannot impose its own view on the creditors, contrary to their commercial judgment, when there is no justification for the same either under the lease agreement or, the Convention or, the Protocol, or even the Municipal Law of the land. The argument centred on equity, even if considered, is tenuous in view of the apprehensions of the petitioners. Equity, as is often said, can only follow law, and not precede it. 

25.4 There is another aspect, which has to be kept in mind, while dealing with such like matters; which is that, a court ought not to proceed in a manner which retards funneling of much needed private finance for business transactions in India. This is not to say where legitimate legal rights surface under the Municipal Law, the court would ignore them. Sans such legitimate legal rights, the courts must prod the concerned statutory authorities to act in consonance with the provisions of international conventions, to which the contracting State is a party.”

The Government of India issued a notification dated the 20^th October 2016 publishing certain draft amendments in the Rules which was thrown open for public comments. The draft rules read as follows:

“(1) These rules may be called the Aircraft (Amendment) Rules, 2016.

(2) They shall come into force on the date of their final publication in the Official Gazette.

2. In the Aircraft Rules, 1937-

(i) In rule 3, in clause (28A), for the word “requested”, the word “request” shall be substituted;

(ii) in rule 30, in sub-rule (7), for the words “as provided in the Cape Town Convention”, the words “within five working days” shall be substituted;

(iii) after rule 32, the following rule shall be inserted, namely: — “32A. Export of aircraft. — Without prejudice to the proviso to rule 30, the Central Government shall, consequent upon cancellation of registration of an aircraft under sub-rule (7) of rule 30, if an application is made by IDERA Holder for export of the same aircraft, take action within five working days to facilitate the export and physical transfer of the aircraft, along with spare engine, if any, subject to compliance with applicable safety rules and regulations relating to that aircraft operation.”

As a consequence of the notification dated 20^th October 2016, by way of another gazette notification dated 23^rd March 2017, Rule 30(7) was amended to specify that the registration of an aircraft to which the Aircraft Protocol and the Convention apply shall be cancelled within five working days of receipt of an application from the IDERA holder.

Furthermore, inter alia, Rule 32(A) was added whereby the Central Government is required to “facilitate the export and physical transfer of the aircraft” upon cancellation of the registration.

“32A. Export of aircraft.—Without prejudice to the proviso to rule 30, the Central Government shall, consequent upon cancellation of registration of an aircraft under sub-rule (7) of rule 30, if an application is made by IDERA Holder for export of the same aircraft, take action within five working days to facilitate the export and physical transfer of the aircraft, along with spare engine, if any, subject to compliance with applicable safety rules and regulations relating to that aircraft operation.”

Rule 30(7) was amended further by way of a gazette notification to state, inter alia, that “the registration of an aircraft registered in India, to which the provisions of the Cape Town Convention and Cape Town Protocol apply, shall be cancelled by the Central Government, within five working days, without seeking consent or any document from the operator of the aircraft or any other person”

Furthermore, inter alia, Rule 32(A) was amended whereby the Central Government, upon cancellation of the registration, is required to facilitate the export and physical transfer of the aircraft, “subject to –

(i) the payment of outstanding dues in respect of the aircraft; and

(ii) the compliance of the rules and regulations relating to safety of the aircraft operation.”

The Hon’ble Delhi High Court pronounced judgement in the GoFirst Insolvency case. It ruled that, inter alia, the DGCA shall proceed to deregister all 54 aircraft as Rule 30(7) is mandatory in nature.

The relevant extract of the judgement dated 26^th April 2024 is reproduced below:

“23.3 While Rule 30(6) of the Aircraft Rules uses the term “may”, Rule 30(7) of the Aircraft Rules uses the term “shall be cancelled”. This signifies that the legislative intent that by use of the word “shall”, the intention was to make Rule 30(7) of the Aircraft Rules, mandatory. This Court concurs with the judgment of a Coordinate Bench of this Court in the Awas case. The Respondent/DGCA is thus, mandatorily required to cancel the registration subject to the fulfilment of the documents and conditions as set forth in Rule 30(7) of the Aircraft Rules.

38.8 Keeping in mind the scope and purview of the Aircraft Act and Rule 30(7) of the Aircraft Rules and given the fact that India is a signatory to the Cape Town Convention and Cape Town Protocol since 31.03.2008 and at the time of its adoption of the Declaration of Accession has clearly agreed to the adoption of “Alternative A” of Article XI of the Cape Town Protocol for “remedies on insolvency”, this Court is of the considered view, for the reasons stated herein, that the words “aircraft, aircraft engines, airframes” ought to have been included in sub-Section (3) of Section 14 of the IBC from the date the sub-Section came into force, so as to ensure implementation of procedure set forth therein for remedies on insolvency in relation to Aircraft which form the subject matter of these Petitions.

40.4 Rule 30 (7) of the Aircraft Rules is mandatory in nature. Sub-Rule 7 of Rule 30 is unambiguous and requires that upon fulfilment of the pre-conditions below and within 5 working days, Respondent/DGCA shall mandatorily deregister the Aircraft:

(i) The aircraft is registered in India;

(ii) The provisions of the Cape Town Convention and Protocol apply to such aircraft;

(iii) An Application for deregistration is presented enclosing:

(a) original/notarised copy of IDERA and

(b) priority search report;

(iv) No consent or recourse to any other person including the operator of the aircraft is to be made.”