Introduction
The Indian aviation sector has witnessed a high growth rate over the recent years due to reasons such as overall economic growth, increase in passenger traffic, infrastructure upgrade and policy initiatives. Majority of the aircraft being operated in India are held by airlines on lease- hold basis. Due to this reason, repossession rights of the lessor in the event of default by lessee assumes utmost importance. In this article, we have analysed the regulatory aspects and practical issues relating to repossession of aircraft in India.
Regulatory framework
Cape Town Convention
India became a signatory to the Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment (hereinafter referred to as 'Cape Town Convention') in 2008. The Cape Town Convention provides for recording of lessors' interests in the international registry and contains provisions enabling lessors to repossess the aircraft without delay in the event of default by lessees.
India is yet to enact a domestic legislation which specifically incorporates the provisions of the Cape Town Convention into its domestic law. Certain amendments have, however, been made to aviation & insolvency laws over the last few years to align the same with the provisions of the Cape Town Convention. These amendments have been discussed in the following paragraphs.
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