Protection of Interests in Aircraft Objects Bill, 2025

Prelims – Indian polity and Governance

Mains (GS II & III) – GS I (Government Policies & Interventions) | GS III (Infrastructure).

Why in News?

Protection of Interests in Aircraft Objects Bill, 2025, was recently introduced in Rajya Sabha.

• The Bill seeks to give legal effect to the following international agreements in their application to India
  • Convention on International Interests in Mobile Equipment (also known as Capetown Convention of 2001), and
  • Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment. 
• India had acceded to these in 2008.
• The Convention and the Protocol aim to bring uniformity in securing rights for high-value assets such as aircrafts, helicopters, and engines. 
• They aim to ensure predictability for creditors in the event of a financial default in
  • A lease – use for a specified period
  • Conditional purchase – transfer of ownership upon completion of certain terms and conditions, or
  • Security agreement – asset given as collateral for borrowing.
• Registry Authority - The Bill designates Directorate General of Civil Aviation (DGCA) as the Registry Authority for the purposes of the Convention. 
• The Registry Authority is responsible for registration and de-registration of aircrafts.
• Obligations of debtors - Debtors must submit records of dues to DGCA. 

A debtor is a person who has taken an aviation asset under a lease or, conditional purchase agreement, or pledged an asset under a security agreement.

• Remedies in case of default - The Convention gives creditors certain remedies in case of default by a debtor. 

A creditor is a person who has provided an aviation asset under a lease or conditional purchase agreement, or has lended under a security agreement. 

• It includes the right to take back possession of the asset within a period of 2 calendar months or a mutually agreed upon period, whichever is earlier.
• The Bill states that before exercising any remedy, the creditor must notify DGCA about the occurrence of default.
• Detention of assets by government agencies -  The following entities will continue to have the right to detain an asset if dues for services related to that asset remain unpaid
  • Central government,
  • Any other entity providing public services in India, or
  • An inter-governmental organization of which India is a member.
• Overriding effect - In case of any inconsistency between the Bill and any other law, the provisions of the Bill will prevail.
• Jurisdiction of High Courts - The High Courts will have jurisdiction over any claim under the Convention.
• Power to make Rules - The Bill empowers the central government to make Rules to implement the provisions of the Convention and the Protocol. 

References

1. Economic Times | Protection of Interests in Aircraft Objects Bill, 2025
2. PRS India | Protection of Interests in Aircraft Objects Bill, 2025