Draft Protection and Enforcement of Interests in Aircraft Objects Bill, 2022
Why in News?
In April 2022, the Ministry of Civil Aviation released the draft Protection and Enforcement of Interests in Aircrafts Objects Bill, 2022.
The proposed law will help international aircraft leasing companies to repossess and transfer planes out of India in case at a financial dispute.
Highlights of the Bill
The Bill implements the provisions of the Convention on International Interests in Mobile Equipment and Protocol on Matter Specific to Aircraft Equipment which was adopted at a conference in Cape Town in 2001.
India acceded to the two instruments in 2008.
These provide default remedies for the creditor and create a legals regime for disputes.
The proposed law provides remedies such as repossession of an aircraft object, or its sole or lease or collection of income from its use as well as de-registration and export of planes.
It also suggest remedies pending final adjudication of a claim as well as safeguards a debtor's claim during insolvency proceeding against its India buyer
Need for the Law
As per the ministry, the draft legislation its necessary because several Indian law such as the Companies Act, 2013 and the Insolvency and Bankruptecy code, 2016 are in conflict with the Cape Town Convention and Protocol.
It says that Indian entities have also suffered as international financial institutions demand and implementing legislation.
Many smaller airlines find it challenging to get leased aircraft. Because the cost of recovery of assets is exorbitant and time consuming.
Problem of International leasing companies in repossessing and exporting aircraft when Jet Airways Shut down in 2019 and failed to pay its aircrafts rentals.