INDIA Law and Practice Contributed by: Nitin Sarin and Vistasp Irani, Sarin & Co
3.2.12 “Parallel Debt” Structures This is not applicable under Indian law. 3.2.13 Effect of Security Assignments on Residence of Secured Parties
The English language security assignment document will suffice and shall be accepted by the DGCA. It is advisable to notarise the security assignments; where they are executed abroad, they should prefer - ably be authenticated by an Indian consular or other diplomatic officer. In recent experience, it has been observed that most government departments, includ - ing the DGCA, accept notarised copies of documents, making the requirement for consularisation more or less redundant. With the aircraft being a movable asset, there is no mandatory requirement to register any mortgages, liens, encumbrances, etc, on it in India. However, the aircraft mortgage can be registered with the Sub- Registrar of Assurances under the Indian Registra - tion Act, 1908 within four months of its execution. This registration (of movables) constitutes persuasive value against a claim by a bona fide purchaser without notice. Registration with the Registrar of Companies is also possible; however, it is not compulsory if the mortgagor of the aircraft is not an Indian entity having its registered place of business in India. 3.2.8 Domestic Law Security Instruments Domestic law security instruments are not required. Where the aircraft’s owner is a foreign entity/citizen, local law filings are not required. Charges in relation to aircraft owned by Indian entities only are required to be registered with the Registrar of Companies as per the provisions of the (Indian) Com - panies Act, 2013, and rules made thereunder. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines The transfer of security interests over an aircraft and/ or engines is recognised in India. 3.2.11 Effect of Changes in the Identity of Secured Parties If the identity of the secured parties under a security assignment changes, the document evidencing this may be filed with the DGCA on its creation. 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
Usually, a secured party under a security assignment would not be deemed to be a resident, domiciled, car - rying on business nor subject to any taxes in India. 3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage over an aircraft or engine is not required in India. 3.2.15 Differences Between Security Over Aircraft and Spare Engines Both aircraft and spare engines are movable objects, so there is no difference between the forms of security required. 3.2.16 Form and Perfection of Security Over Bank Accounts A bank account can be charged by way of hypotheca - tion. The deed of hypothecation would need to be filed with the bank maintaining the account, which must be charged in order for it to be perfected. 3.3 Liens 3.3.1 Third-Party Liens The question of whether a third party could take or register a lien over an aircraft or engine would depend on who is trying to discharge the lien. Where the les - see seeks to discharge this lien, it would be liable to pay the total outstanding amount payable to that third-party contractor/repairer. However, if a lessor or secured party seeks to discharge a lien, in all prob - ability it would have to bear only the value of the work actually done on that particular aircraft asset. In a case of deregistration and export by filing an IDERA under AIC 12 of 2018, the IDERA holder must bear the cost of all charges accrued three months prior to the date of submission of the IDERA, owed to the central gov - ernment, any entity thereof or any intergovernmental organisation in which India is a member, or other pri - vate provider of public services in India. A fleet lien is not recognised under the new Cape Town Convention and Aircraft Protocol regulations.
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