The Director General of Civil Aviation Entrusted with the Power to Deregister Aircraft on the Basis of an IDERA

The Director General of Civil Aviation Entrusted with the Power to Deregister Aircraft on the Basis of an IDERA

By

Nitin Sarin

21st September 2017

It is a well-known phenomenon, that India is currently struggling in relation to proper implementation of the Cape Town Convention on International Interests in Mobile Equipment (the “CTC”) and the Aircraft Protocol (the “Protocol”). While there exists a strong will by the Ministry of Civil Aviation (“MoCA”) to rectify this problem and while many positive steps have been taken in the last few years, yet, much more needs to be done.

Sarin & Co. was involved in a recent aircraft repossession case wherein, on the presentation of an Irrevocable Deregistration and Export Request Authorization (“IDERA”) to the Directorate of Airworthiness, a negative response was received stating that no action could be taken as the MoCA had not formally delegated any power to the Directorate General of Civil Aviation (the “DGCA”) to enable its officers to act in accordance with Rule 30 (7) of the Aircraft Rules, 1937.

Rule 30 (7) of the Aircraft Rules, 1937 is the only piece of subordinate legislation in India that actually embodies the CTC and Protocol. The rule is reproduced 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.”

The response of the DGCA to the effect that it did not have the power to act on the basis of an IDERA was disappointing more so in light of the fact that we received a categoric response to the effect that all IDERA cases were to be referred to the MoCA for a final decision (thereby meaning de-registration on the basis of an IDERA could take a few weeks if not a few months). As a matter of practical experience, the deregistration of an aircraft on the basis of an IDERA recently took almost 4 to 5 months as the DGCA referred the case to the MoCA (the Supertech case).

The MoCA seems to have taken cognizance of this irregularity and has promptly attempted to patch the hole in as much as on the 25th of August 2017, the Ministry has notified in the Official Gazette of India that in accordance with Rule 30 (7), the Director General shall have the power “to cancel registration of an aircraft to which the provisions of the Cape Town convention or Cape Town Protocol apply.”.

This power, i.e. to cancel the registration of an aircraft in accordance to the CTC and Protocol, is derived from the fact that no other officer of the DGCA has been given the ability to do so, apart from the Director himself who has “All powers”.

It is a moot point to see whether the Director General further delegates this power to the Directorate of Airworthiness or not. It is anticipated that in case no such further delegation is made, cancellation of registration of an aircraft may take more than the stipulated 5 days owing to availability (or unavailability) of the Director, who is understandably, a very busy Officer being the Commander in Chief of the Directorate.

All in all, this is a positive step taken by the MoCA to ensure that owners of aircraft and aircraft lessors have utmost confidence in the Authority and would eventually allow the cost of credit for Indian airlines to be lowered, albeit gradually. Also importantly, we are eagerly awaiting the delegation of power by the MoCA in relation to the newly introduced Rule 32A (also a CTC and Protocol provision) in relation to “export of aircraft”.

Rule 32A is reproduced 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.”

The notification dated 25th August 2017 published in the Official Gazette of India can be found here.

The detailed list of all powers which may be exercised by the Officers of the DGCA can be found here.

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