New Law: Aircraft in India to be De-registered within 5 days

THE GOVERNMENT OF INDIA FURTHER ALIGNS ITS REGULATIONS WITH THE CAPE TOWN CONVENTION & PROTOCOL

The Government of India had, previously (after immense pressure from the Industry) notified an amendment to the Aircraft Rules, 1937 to give the Cape Town Convention & Protocol some power and recognition. This amendment was in the form of Rule 30 (7) of the Aircraft Rules, 1937.

The unamended Rule 30 (7) of the Aircraft Rules reads as under:

“ (7) 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.”

That all the concerned stakeholders, industry partners and law firms jointly, were of the opinion that while this step was in the right direction, many more amendments were desperately required to bring India’s legislation up to the mark. Investor confidence was the requirement of the hour and various representations were made to the Government of India to overcome various problems such as, inter-alia, (i) the inability of subordinate legislation (the Aircraft Rules, 1937) to override legislation passed by Parliament; (ii) the lack of time frame, under the Rules, for the DGCA to take action on a request of an IDERA holder and (iii) no provision for export of the aircraft from India under the Rules.

In October 2016, the Government released a notification wherein it invited comments and objections from the general public on a draft amendment to the Aircraft Rules. They sought to amend Rule 30 (7) and introduce a new Rule 32A (dealing with export of aircraft).

After receiving all comments and objections, the Government has, on March 23th 2017 (published on March 28th 2017) notified the final amendment to Rule 30 (7) and also introduced Rule 32A to the Aircraft Rules, 1937.

The amended Rule 30 (7) now reads as under:

“ (7) 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, within five working days, 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.”

Therefore it is clear that the Government now mandates that the DGCA shall cancel the registration of an aircraft registered in India (provided the Cape Town Convention and Protocol applies to it) within a period of five working days on the receipt of an application from the IDERA holder along with the original or notarised IDERA and a certificate that all Registered Interest’s ranking in priority have been discharged or such holders have given their consent to such deregistration and export.

The Government has also introduced Rule 32A which reads as under:

“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.”

Essentially, this is a new provision to Indian aviation law that envisages an application from an IDERA holder to the DGCA (the DGCA exercises the power of the Central Government under the Aircraft Act unless the Central Government by notification appoints any other Authority) requesting the export and physical transfer of the aircraft. In case such an application is made, the DGCA is once again mandated to take action within a period of five working days to “facilitate” the export and physical transfer of the aircraft along with any spare engine if any.

The moot question still remains as to in what manner the DGCA can facilitate such an export and physical transfer. Moreover, there are a plethora of unanswered questions that still exist; however, one can only sum up the new amendment as a step in the right direction.

Posted from onboard EK 511 Boeing 777-300ER (A6-ENE) on 2nd April 2017.

One comment

  1. Dear Nitin, Thanks for the interesting piece. Indeed, a step forward to facilitate international aviation financing and leasing related legal and practical matters in India. Nonetheless, at first sight and considering the particular requirements for a succesful procedure it does not look like an easy job to undertake. Hopefully, in practice the new rules will work as well. In the meantime, the registration of commerically and privately operated Indian aircraft in a foreign ‘save-haven’ jurisdiction based on an article 83bis Chicago Convention (1944) agreement remains a recommended manner to solve many issues that still may arise in India. For more detailed information, please consult my recent relating posts on LinkedIn concerning the repossession of aircraft. Have a good flight, wherever you are travelling to. Best regards, Patrick

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s