Aircraft lessor SMBC Capital has told appellate tribunal NCLAT that the Indian aviation sector is being seen as a risky jurisdiction in light of the fate of Kingfisher and Jet Airways, as it vehemently opposed cash-strapped Go First's insolvency resolution proceedings.
Describing Go First's petition as "malicious and a smokescreen", SMBC Capital also said that voluntary insolvency proceedings cannot be an escape route by promoters who have run the corporate debtor/ corporate applicant into the ground to escape the consequences of such defaults.
The National Company Law Tribunal (NCLT) on Wednesday admitted the airline's voluntary insolvency resolution petition and appointed an Interim Resolution Professional (IRP) to manage the carrier. Besides, there is a moratorium on the assets and liabilities, which also means that lessors cannot take back the planes leased to the crisis-hit Go First during the process.
SMBC Capital's plea seeking a stay on the NCLT order was heard by the National Company Law Appellate Tribunal (NCLAT) on Thursday and the hearing will continue on Friday.
"The Indian aviation sector is being seen as a risky jurisdiction in light of the fate of Kingfisher and Jet Airways. Due to such difficulties, lessors and international aircraft owners see India as a risky jurisdiction for aircraft leasing.
"Therefore, Indian operators have to pay a premium to take aircraft on lease. Thus, the admission of the petition will further shake the confidence of the international aviation industry," SMBC Capital said in its petition filed before the NCLAT.
Most of the lessors of aircraft of Indian airline operators are based outside India.
According to SMBC Capital, each lessor has a right to continue its resumed possession of the aircraft and to export or re-lease to aircraft to other functional airline operators, including those in India.
"The inclusion of the aircraft under the purview of the moratorium is with complete disregard to the provisions of the Aircraft Rules and the directions issued by the Government of India thereunder, the Cape Town Convention and Protocol and the declarations of India thereunder.
"Such process sought to be initiated by the corporate applicant is completely barred by law and ought to be deprecated by this Hon'ble Adjudicating Authority," it noted.
The corporate applicant refers to Go Airlines (India) Ltd, which operates air services under the brand name Go First.
Further, the lessors said that Go First's petition is a smokescreen, and a malicious attempt to delay the exercise of rights by the lessors, both under the IBC (Insolvency and Bankruptcy Code) and the Cape Town Convention.
SMBC Capital also said that the operations of Go First appear to have been deliberately jeopardised by its promoters to obtain a declaration of the moratorium from the NCLT.