INDIA Trends and Developments Contributed by: Ajay Kumar, Anchal Nanda and Hetram Bishnoi, KLA Legal
Alternative A Under Alternative A, upon the occurrence of an insol - vency-related event, the insolvency administrator (or resolution professional) or the debtor must, by the end of the “waiting period” declared by the state (two cal - endar months in the case of India), either: • give possession of the aircraft object(s) to the creditor or lessor; or • cure all defaults (except the insolvency itself) and agree to perform all future obligations under the contract. During this period, the aircraft must be preserved and maintained in accordance with the transaction documents. Crucially, no court approval is required for repossession at the end of the waiting period, making the remedy automatic and less susceptible to delays. Alternative B Under Alternative B, when an insolvency-related event occurs, the debtor or resolution professional, upon the creditor’s request, must notify the creditor within the period specified in the state’s declaration whether it will: • perform future obligations and cure agreed defaults (excluding the insolvency event); or • permit the creditor to take possession, subject to additional conditions or court approvals, as per applicable domestic law. Unlike Alternative A, Alternative B does not provide a fixed timeline for repossession, leaving significant discretion to the national courts. This may lead to uncertainty and enforcement delays, especially in jurisdictions with congested or unpredictable judicial systems. India has opted for Alternative A with a two-month waiting period, according to which the insolvency administrator or the debtor, as applicable, shall (sub - ject to conditions stipulated under the Convention) give possession of the aircraft object to the creditor no later than either the end of the waiting period or the date on which the creditor would be entitled to possession of the aircraft object if the Act did not apply, whichever is earlier. India has implemented this
through a combination of ratification and declarations made under Article XXXIX of the Convention and Arti - cle XXX of the Protocol, and amendments to the Air - craft Rules, 1937, to give effect to these declarations administratively – particularly through the DGCA. The relevant part of the Declaration reads: “Pursuant to Article XXX(1) of the Protocol, India declares that it will apply Article XI, Alternative A in its entirety to all types of insolvency proceedings and that the waiting period for the purposes of Article XI(3) of that Alternative shall be 60 calendar days.” Types of transactions afforded protection under the Cape Town Convention Alternative A gives creditors strong insolvency pro - tection as the insolvency resolution professional must return aircraft or agree to perform the contract within a “waiting period”. If this requirement is not complied with, the creditor can repossess and export the air - craft, notwithstanding the IBC moratorium. Other salient provisions under the Act Under Section 7 of the Act, a creditor may apply to the DGCA for de-registration and export. The DGCA must honour the Irrevocable De-Registration and Export Request Authorisation (IDERA) when submitted. No judicial order is needed unless there is a dispute; deregistration must be processed swiftly. Section 8 of the Act vests exclusive jurisdiction for Convention-related disputes in the High Courts. Sec - tion 9 contains an overriding clause, stating that the provisions of the Act will prevail over any other incon - sistent law, ensuring the primacy of the Convention framework. However, the law also carefully balances public interest by preserving the right of the govern - ment and public authorities to detain aircraft for dues related directly to services rendered. Under Section 11, the Act permits the central government to make rules that are necessary to carry out its provisions. What it means for stakeholders India’s enactment of the CTC Act means that regis - tered interests in aircraft are recognised, improving cross-border financing and asset management, and demonstrating India’s commitment to rule-based international aviation practices. With internationally
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