For aircraft lessors, the real risk lies in recovering an aircraft when an airline defaults. India’s insolvency proceedings between May 2023 and April 2024 exposed the conflict between aircraft repossession rights and the IBC moratorium, reshaping the legal framework for aircraft leasing insolvency in India. These developments are particularly relevant to lessors operating from GIFT IFSC and leasing aircraft to Indian operators.

The Collision

Section 14(1) of the Insolvency and Bankruptcy Code, 2016 declares a moratorium on the insolvency commencement date. Clause (d) prohibits “the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor”. On its face, that captures a leased aircraft.

Against it stands rule 30(7) of the Aircraft Rules, 1937, which implements Article XIII of the Cape Town Protocol. On an application supported by an irrevocable deregistration and export request authorisation (IDERA) and a priority search report, the registration of the aircraft shall be cancelled within five working days, without reference to the operator.

When Go Airlines (India) Limited entered insolvency on 10 May 2023, the DGCA declined to process lessors’ deregistration applications, citing the moratorium. Fifty-four aircraft were grounded, and India’s compliance rating under the Cape Town Convention fell.

The Central Government’s Answer

On 3 October 2023, the Ministry of Corporate Affairs issued notification S.O. 4321(E) under section 14(3)(a) of the IBC, which permits the Central Government to notify transactions to which the moratorium does not apply. The notification recites India’s accession to the Cape Town Convention and Protocol on 31 March 2008 and provides that section 14(1) “shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters”.

Because the moratorium in the Go First case had been imposed five months earlier, the immediate question became whether the notification operated retrospectively.

What the Delhi High Court Decided

In Accipiter Investments Aircraft 2 Ltd. v. Union of India, decided on 26 April 2024, a Single Judge of the Delhi High Court (Tara Vitasta Ganju, J.) decided the connected writ petitions of the lessors. Four holdings matter.

Rule 30(7) is mandatory. Following the coordinate bench decision in Awas 39423 Ireland Ltd. v. DGCA, the Court contrasted the permissive “may” in rule 30(6) with “shall be cancelled” in rule 30(7). Deregistration is a ministerial act once the prescribed documents are filed; disputes about the validity of the lease termination are irrelevant to it.

The High Court had jurisdiction. The petitions sought a writ against the DGCA for failure to perform a statutory duty under the Aircraft Act and Rules. That is a matter for Article 226, not for the NCLT, which cannot deregister an aircraft.

There was no inconsistency in the first place. The defaults under the leases, and the commencement of deregistration, preceded the insolvency commencement order. The termination was caused by default, not by the insolvency.

The notification is retrospective. Applying Zile Singh and the Division Bench decision in Nasa Finelease, the Court held that the notification cured a lacuna, was a necessary adjunct to India’s 2008 Declaration of Accession adopting “Alternative A” of Article XI of the Protocol, and that delay in issuing it could not defeat its beneficiaries.

The Court set aside the DGCA’s rejection letters, directed deregistration of the listed aircraft within five working days, permitted lessors to maintain the aircraft pending export, restrained the resolution professional from operating or stripping them, and required delivery of technical records. Go Airlines was later ordered into liquidation on 20 January 2025, and the NCLAT upheld that order on 4 April 2025.

India’s Aircraft Leasing Insolvency Framework

India then legislated. The Protection of Interests in Aircraft Objects Act, 2025 (Act 17 of 2025) received assent on 16 April 2025 and gives the Convention and Protocol the force of law in India (section 3). Four provisions repay attention:

• Section 6 applies Article XI of the Protocol, subject to India’s declaration, mutatis mutandis for remedies on insolvency “under any law for the time being in force” — but only where the debtor is Indian-incorporated or India-domiciled, the international interest has been registered under the Convention and Protocol, and the parties have not excluded the section by written agreement.
• Section 5(2) makes a creditor’s remedies conditional: no remedy may be exercised unless the creditor declares the default by notifying the registry authority (the DGCA).
• Section 8 designates the High Court having territorial jurisdiction as the relevant court for the purposes of Article 53 of the Convention.
• Section 9(1) gives the Act overriding effect over inconsistent law, while section 9(3) expressly preserves the right of the Government, its entities and public-service providers to arrest or detain an aircraft object for dues relating to services provided in respect of it.

The Protection of Interests in Aircraft Objects Rules, 2026 (G.S.R. 77(E), 30 January 2026) supply the machinery. Rule 11 is the operative provision on insolvency: where the debtor is subject to proceedings under the IBC, the moratorium under section 14 commences on the insolvency commencement date and expires at the end of two calendar months, and that period is the “waiting period”. No Convention or Protocol remedy may be prevented or restricted after it expires. During it, the resolution professional must preserve the aircraft object, maintain its value under the contract, and give the creditor access to the object and to its technical and maintenance records. The debtor or professional may retain possession only by curing all defaults other than the insolvency itself before the period ends and agreeing to perform future obligations.

What a Lessor must Actually Do?

Appendix A dues are airport operator charges, route navigation and facilitation charges, terminal navigation landing charges, fuel charges as a public service, and GST on the leasing or financing. Separately, India’s Second Schedule declarations give priority to certain non-consensual interests, including liens for unpaid airline wages after a declared default, authority liens for taxes and charges, and repairers’ liens. Repossession is therefore a process with a price, not a simple recovery.

What Remains Unsettled

Two points deserve candour. First, rule 11(1) speaks of the section 14 moratorium commencing and expiring at two months, while the 2023 notification disapplies section 14(1) to Convention transactions altogether. The two instruments are capable of being read harmoniously, but the relationship between them has not, as at 17 September 2026, been authoritatively settled by a superior court. Second, the Insolvency and Bankruptcy Code (Amendment) Act, 2026, substantial provisions of which were brought into force on 26 May 2026, did not disturb section 14(3)(a), so the 2023 notification continues to operate.

Frequently Asked Questions

1. How does insolvency affect aircraft leasing in India?

The IBC moratorium can restrict recovery of leased aircraft, subject to the Cape Town framework, the 2023 MCA notification and the 2026 Rules.

2. What is the Cape Town Convention’s role in aircraft repossession?

It establishes international rules for aircraft interests and provides remedies, including deregistration and recovery, subject to applicable conditions.

3. What is the waiting period under the Aircraft Objects Rules, 2026?

Rule 11 prescribes a two-calendar-month waiting period from the insolvency commencement date for relevant IBC proceedings.

4. Can aircraft lessors in GIFT IFSC deregister an aircraft after default?

Yes, subject to the applicable legal requirements, including IDERA, notification to the DGCA and relevant creditor claims and dues.

5. Which law governs aircraft leasing insolvency in India?

The principal framework includes the IBC, the Protection of Interests in Aircraft Objects Act, 2025, the 2026 Rules and the Cape Town Convention and Protocol.

Verification status / research cut-off: 17 September 2026. No appellate decision setting aside or modifying the judgment of 26 April 2024 was traced as at that date. The Act of 2025 is stated to have been brought into force on 1 May 2025 on the basis of published professional analysis; the commencement notification under s. 1(2) should be verified before reliance on that date. The Go Airlines liquidation dates are taken from reputable legal journalism rather than from the orders themselves.

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