Bill introduced to resolve disputes involving aircraft, engines

Minister for Civil Aviation Ram Mohan Naidu 
| Photo Credit: PTI

Minister for Civil Aviation Ram Mohan Naidu on Monday tabled a Bill in Parliament that seeks to recognise the international treaty on resolution of disputes related to recovery of aviation assets such as aircraft and engines often seen between airlines and lessors including during airline shutdowns such as those of Go First, Jet Airways and Kingfisher Airlines.

The Minister tabled the Protection and Enforcement of Interests in Aircraft Objects Bill, 2025 in Rajya Sabha. It seeks to implement the Convention on International Interests in Mobile Equipment, 2001 or Cape Town Convention (CTC) and Protocol. Though India signed the CTC in 2008, it has not yet ratified it rendering the provisions not legally binding in the country. The passage of the Bill in Parliament will plug this gap.

The CTC is an international treaty that standardises transactions involving movable property, including aircraft, engines, and helicopters

Section 3 of the Bill tabled in Parliament proposes that the Convention and Protocol “shall have the force of law in India, in respect of the aircraft objects and in accordance with the declarations deposited by India.”

The Bill recognises the DGCA as the authority that can issue necessary directions for implementing the provisions of the CTC.

The proposed legislation also requires a debtor to maintain and submit records of dues arising from the ownership or use of the aircraft or aircraft object. It also states that a creditor can exercise a remedy under the CTC only after notifying the DGCA of the default.

In case of an insolvency, the Bill proposes that the resolution professional can keep the aircraft or other assets for a period of 60 days subject to payment for usage and maintenance which is being seen as a retrograde step by the leasing industry. According to a Ministry of Corporate Affairs notification of April 2024, these assets were to be kept out of the purview of Insolvency and Bankruptcy Code, 2016.