Notification: Exemption under IBC Section 14(3)(a) for Aircraft Equipment Transactions
In a significant development, the Ministry of Corporate Affairs, Government of India, has issued a notification exempting certain transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters from the provisions of Section 14(3)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC). This notification, dated October 3, 2023, is a notable step in aligning Indian regulations with international conventions. Let’s explore the details and implications of this exemption.
Background: Convention and Protocol
The Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment were adopted in Cape Town on November 16, 2001. These agreements were established under the joint auspices of the International Civil Aviation Organization (ICAO) and the International Institute for the Unification of Private Law.
India, as a signatory to the Convention and the Protocol, acceded to these agreements by depositing the instruments of accession on March 31, 2008. These international agreements set specific standards and procedures for transactions and arrangements related to aircraft, aircraft engines, airframes, and helicopters, aiming to streamline and facilitate such dealings on a global scale.
Exemption under IBC Section 14(3)(a)
In exercise of the powers conferred by clause (a) of sub-section (3) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government has issued this crucial notification. It declares that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016, shall not apply to transactions, arrangements, or agreements that fall under the Convention and the Protocol, specifically those involving aircraft, aircraft engines, airframes, and helicopters.
This exemption is significant for several reasons:
- International Alignment: The notification aligns Indian regulations with international standards set by the Convention and the Protocol. It ensures that transactions and arrangements related to aircraft equipment adhere to globally recognized principles.
- Facilitating Transactions: By exempting these transactions from the provisions of IBC Section 14(3)(a), the government aims to facilitate smoother dealings in the aviation industry, including the financing and leasing of aircraft and associated equipment.
- Promoting Investment: The exemption encourages investment and financing in the aviation sector by providing legal clarity and predictability for stakeholders involved in such transactions.
- Regulatory Clarity: This notification eliminates potential conflicts between IBC regulations and international agreements, thereby reducing legal ambiguity for entities engaged in aircraft equipment transactions.
Conclusion
The Ministry of Corporate Affairs’ notification, exempting transactions related to aircraft, aircraft engines, airframes, and helicopters from the scope of IBC Section 14(3)(a), reflects India’s commitment to harmonizing its legal framework with international conventions. This move is expected to enhance the ease of doing business in the aviation industry, promote investment, and provide regulatory clarity for stakeholders involved in aircraft equipment transactions. It marks a significant step towards aligning Indian regulations with global best practices in the aviation sector.
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MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 3rd October, 2023
S.O. 4321(E).—WHEREAS, the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment were adopted under the joint auspices of International Civil Aviation Organization and the International Institute for the Unification of Private Law concluded at Cape Town on 16th November, 2001;
AND WHEREAS, India, being a signatory to and having acceded the Convention and the Protocol by depositing with the International Institute for the Unification of Private Law the instruments of accession on 31.03.2008;
Now, therefore, in exercise of the powers conferred by clause (a) of sub-section (3) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.
[F. No. Insol-30/9/2020-Insolvency-MCA]
ANITA SHAH AKELLA, Jt. Secy.
