INDIA Law and Practice Contributed by: Nitin Sarin and Vistasp Irani, Sarin & Co
2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease agreement can cover parts installed or replaced on an aircraft or engine after its execution, provided the agreement contemplates such inclusion/ coverage. For parts not covered under the lease, the parties may enter a simple side letter or short lease amendment agreement. 2.2.4 Risk of Title Annexation India will recognise the separate (and distinct) rights of both the owner(s) of the airframe and the owner(s) of each engine. As such, with India being a common law jurisdiction, title annexation does not apply. 2.2.5 Recognition of the Concepts of Trust/Trustee Indian law recognises the concept of a trust and the role of an owner trustee. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The Directorate General of Civil Aviation (DGCA) is the authority responsible for maintaining the aircraft regis - ter in India and records the details of the owner, lessor, operator and mortgagee (if applicable). The effect of such notation on the aircraft register shall amount to notice to all third parties regarding the existence of such an interest in that aircraft. 2.3.2 Registration If the Owner Is Different From the Operator Registration is possible even if the owner differs from the operator. Once registered, an aircraft is issued a certificate of registration by the DGCA, containing details such as the name, address and nationality of the owner, lessor, operator and mortgagee (if applica - ble) of the aircraft. 2.3.3 Aircraft/Engine-Specific Registers At the time of registration of an aircraft taken on lease, the applicant is required to submit a copy of the lease agreement to the DGCA. DGCA requirements state that any lease amendments or novations must also be filed with the DGCA. There is no engine-specific reg - ister nor any requirement to submit a lease in relation to an aircraft engine to any authority in India.
its commercial banks (known as authorised dealer, or AD, banks), making it easier for a domestic lessee to make rent payments to foreign operating lessors in foreign exchange. Specific approval is required from the RBI in case of remittance of payments under finance leases. 2.1.4 Exchange Controls Repatriation of foreign exchange as rent payments requires the indirect approval of the RBI. In relation to operating leases, the power to approve is delegated to AD banks, but the remittance of payments for finance leases requires the specific approval of the RBI. Simi - larly, in cases where a lease is enforced by a foreign lessor (operating or finance), the RBI’s approval would also be required before the repatriation of any realised proceeds. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease The execution of a lease agreement physically in India would typically attract the levy of stamp duty. The stamp duty on lease agreements executed overseas must be paid within three months of such a docu - ment’s entry into India. The amount of stamp duty payable varies across states, as each state has its A lessor does not need to be licensed or otherwise qualified in India to do business with a domestic les - see. However, a foreign lessor based in a prohibited or sanctioned country would not be permitted to do business in India. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law No mandatory terms are required to be in a lease; the lease itself must be a valid and binding contract between two parties competent to contract. own respective stamp duty legislation. 2.1.6 Licensing/Qualification of Lessors 2.2.2 Tax and Withholding Gross-Up Provisions Tax and “gross-up” clauses are permissible and may be enforced by the courts, provided they form part of the binding contract entered into between the parties.
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