Gujarat: Aircraft’s sale flies, payment in RBI turbulence

AHMEDABAD: An aircraft has been sold and the buyer has leased it to a third party, and now the original seller awaits anxiously at the conveyor belt of court judgments and RBI rules to collect the payment.
The Gujarat high court on Wednesday issued notices to two aviation companies over an appeal to restrain them from “dealing with” a $2.5 million aircraft. The aircraft was sold but the payment could not be made because the RBI has not cleared the remittance citing the Centre’s rules.
The case involves Axia Aviation Ltd, which sold a Gulfstream G200 to Ahmedabad’s Vels Aviation Services IFSC Pvt Ltd. A Sale Purchase Agreement (SPA) was inked in August 2021. But the payment of Vels was constrained by the seatbelt of red tape.
This made Axia move Gandhinagar’s civil court to demand the cancellation of SPA. It also sought to repossess the jet and restrain Vels from dealing with the aircraft, registering it, or leasing or selling it to a third party. Axia also sought directions with regard to the maintenance of the aircraft.
It was during the pendency of the suit that Vels revealed that it had already leased the jet to Pinnacle Air Pvt Ltd and that the plane has been registered with the Directorate General of Civil Aviation in the name of Vels. In the high court, all the parties agreed to have Pinnacle as part of the litigation. The high court heard one case and directed Axia and Vels each to pay half of the maintenance cost. It directed the trial court in Gandhinagar to decide other issues.
After a preliminary hearing, principal senior civil judge H V Joshi in the Gandhinagar court on May 7 decided on a couple of applications filed by the aviation companies. Vels and Pinnacle have been temporarily restrained “from disposing of, alienating, encumbering, parting with possession, or creating third party rights on the aircraft till the final decision of the suit”.
The trial court rejected Axia’s request for the repossession of the jet. It also denied Axia permission to undertake maintenance, repair, or overhaul of the aircraft at its expense. The court clarified that these expenses would be borne by the purchaser company and the lessee.
Since the trial court did not restrain Vels and Pinnacle from dealing with the aircraft, Axia moved the high court once again. The bench of Justice S H Vora and Justice Mauna Bhatt issued notices to Vels and Pinnacle and posted a hearing next week.