The National Company Law Tribunal (NCLT) on Monday ordered the liquidation of budget air carrier Go First Airways..A bench of NCLT comprising Judicial Member Mahendra Khandelwal and Technical Member Dr. Sanjeev Ranjan allowed an application for liquidation filed by the Committee of Creditors (CoC) of Go First. “Liquidation is ordered," the NCLT said..On May 2, 2023, Go First filed a voluntary plea under Section 10 of the IBC, seeking admission to the Corporate Insolvency Resolution Process (CIRP). The NCLT admitted the application on May 10, appointing a Resolution Professional (RP) to manage the airline's affairs.In response, the airline's lessors appealed to the National Company Law Appellate Tribunal (NCLAT), arguing that their assets had been unfairly retained under the moratorium despite the termination of leases before the proceedings began. On May 22, 2023, the NCLAT upheld the NCLT's decision and directed the lessors to seek clarification regarding the moratorium from the NCLT.The lessors subsequently approached the Delhi High Court, urging the Directorate General of Civil Aviation (DGCA) to deregister their aircraft. Initially, the DGCA resisted, citing the moratorium. However, on October 4, 2023, the Ministry of Corporate Affairs clarified that Section 14(1) of the IBC would not apply to transactions involving aircraft, engines, airframes or helicopters..The DGCA then submitted an affidavit before the Delhi High Court affirming that the exemption should apply to pending cases but deferred action on Go First’s case, citing its sub judice status. On April 26, 2024, the Delhi High Court ordered the DGCA to deregister the airline’s fleet, which was completed by early May 2024. Maintenance and export of the deregistered aircraft were assigned to the lessors under Rule 32A of the Aircraft Rules.Faced with no aircraft and no viable revival options, the CoC decided in September 2024 to liquidate the company and filed the application for the same.In October 2024, the bench had raised apprehensions about permitting the company’s Resolution Professional (RP) Shailendra Ajmera to be its liquidator. The bench also questioned whether it could give its seal of approval for third party funding to pursue an arbitration at Singapore International Arbitration Centre (SIAC).Subsequently, the CoC named Dinkar Venkatasubramanian as its liquidator, which the tribunal approved in its order. .However, the NCLT refused to rule on third funding to pursue arbitration. The NCLT emphasized that the CoC, comprising financial creditors such as banks, has sufficient funds to handle the litigation at SIAC. The order said "We may state that in the present case, Members of CoC are the Financial Creditors especially, the Banks. Therefore, it is presumed that these Financial Creditors must have sufficient funds for handling the arbitration pending before the SIAC.".Furthermore, it noted that since no litigation is pending in India courts. “As of now, no litigation is pending in any Indian Court, and none of the pending litigations is governed by the provisions of the IBC or the Regulations made thereunder,” the tribunal stated..It therefore found that it does not have to rule on third party funding. "We are not inclined to examine the merits and legality of the aforesaid Litigation Funding Agreement... and consequentially, we are not inclined to pass any order in respect of [the related prayers].”.Advocates Diwakar Maheshwari, Kumar Saurabh Singh and Vishnu Sriram from Khaitan & Co appeared for for the Resolution Professional.Soumitra Majumdar from JSA Advocates appeared for the CoC.Read Judgment
