Supreme Court ordered full refund of air tickets booked during lockdown

The 3-judge bench of Ashik Bhushan, R. Subhash Reddy, JJ has directed full refund of air tickets booked during lockdown period i.e. from 25th March 2020 to 24th May 2020 for travel during the lockdown period. The order of the Court came after accepted Directorate General of Civil Aviation’s (DGCA) proposal of

To contain the pandemic situation of COVID¬19, the lockdown was imposed by the Government of India, from 25th March 2020 to 14th April 2020 which was later extended up to 03rd May 2020.  A ban was also imposed on operation of all domestic and international flights. There was an issue of refund of airfare during the lockdown period when domestic and international flights’ operation was suspended. The Ministry of Civil Aviation (MoCA), while acknowledging the unusual situation that has arisen due to the lockdown imposed, to contain further spread of COVID¬19 and its consequential effect on the air passengers and airlines, by examining the grievances received from various quarters, issued an advisory to all stakeholders in the civil aviation sector in the shape of Office Memorandum dated 16th April 2020.

The present writ petition was filed to declare the action on the part of the respondent-airlines, operating domestically as well as international flights in India, in not refunding the full amount collected for the tickets, due to the cancellation of flights in the wake of restrictions imposed by the Government of India to contain COVID-19 as arbitrary and in violation of Civil Aviation Requirements, issued by the Directorate General of Civil Aviation. A consequential relief was sought to direct the respondents to refund the full amount upon such cancellations.

The Court noticed that in ordinary course modalities and timelines for a refund on cancellation of tickets are governed by, the Civil Aviation Requirements, i.e. CAR dated 22nd May 2008; 06th August 2010 as revised on 27th February 2019, and the said Requirements are issued by the competent authority in the exercise of powers under the provisions of Aircrafts Act, 1934 and the Rules made thereunder.

It, however, said that

“… we cannot lose sight of the present situation prevailing in the country and across the globe, i.e. the effect of pandemic COVID-19.  It cannot be disputed that the civil aviation sector, which is one of the important sectors, is seriously affected in view of the ban imposed for operating flights. Added to the same, air passenger traffic has come down heavily and which is gradually being restored.  At this moment any strict enforcement action of the CARs would further restrict/reduce their operations and such enforcement action may further jeopardise the possibilities of the generation of cash by airlines which can further adversely affect/delay the refund cycle. “

Strict enforcement of Civil Aviation Requirements at this moment may not yield any meaningful result for any stakeholder.  Hence, in view of the suggestions and formulations arrived at in the meetings held by Union of India and DGCA, which are acceptable to the majority of stakeholders, the Court directed that the same have to be implemented in letter and spirit since such formulations are workable solutions in these peculiar circumstances which are prevailing in the country.

DIRECTIONS ISSUED

  1. If a passenger has booked a ticket during the lockdown period (from 25th March 2020 to 24th May 2020) for travel during lockdown period and the airline has received payment for booking of air ticket for travel during the same period, for both domestic and international air travel and the refund is sought by the passenger against that booking being cancelled, the airline shall refund the full amount collected without any cancellation charges. The refund shall be made within a period of three weeks from the date of cancellation.
  2. If the tickets have been booked during the lockdown period through a travel agent for travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately. On such refund, the amount shall be passed on immediately by the agent to the passengers.
  3. Passengers who booked tickets at any period of time but for travel after 24th May 2020 – refund of fares to the passengers covered under this category shall be governed by the provisions of Civil Aviation Requirements (CAR).
  4. Even for international travel, when the tickets have been booked on an Indian carrier and the booking is ex¬India, if the tickets have been booked during the lockdown period for travel within the lockdown period, the immediate refund shall be made.
  5. If the tickets are booked for international travel on a foreign carrier and the booking is ex¬India during the lockdown period for travel within the lockdown period, a full refund shall be given by the airlines and said amount shall be passed on immediately by the agent to the passengers, wherever such tickets are booked through agents. In all other cases, the airline shall refund the collected amount to the passenger within a period of three weeks.
  6.  In all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days from today. If on account of financial distress, any airline/airlines are not able to do so, they shall provide credit shell, equal to the amount of fare collected,   in the name of the passenger when the booking is done either directly by the passenger or through a travel agent so as to consume the same on or before 31st March 2021.  It is open to the passenger either to utilize such credit etc. shell up to 31st  March 2021 on any route of his choice or the passenger can transfer the credit shell to any person including the travel agent through whom he/she has booked the ticket and the airlines shall honour such a transfer.

The credit shell issued in the name of the passenger shall be transferable which can be utilize upto 31st  March, 2021 and the concerned airline shall honour such a transfer by devising a mechanism to facilitate such a transfer. It is also made clear that such credit shell can be utilized by the concerned agent through whom the ticket is booked, for third party use. It is also made clear that even in cases where credit shell is transferred to third party, same is to be utilized only through the agent who has booked the ticket at the first instance.

  1. In cases where passengers have purchased the ticket through an agent, and credit shell is issued in the name of passenger, such credit shell is to be utilized only through the agent who has booked the ticket. In cases where tickets are booked through agent, credit shell as issued in the name of the passenger which is not utilized by 31st March, 2021, refund of the fare collected shall be made to the same account from which account amount was received by the airline.
  2. In all cases where credit shell is issued there shall be an incentive to compensate the passenger from the date of cancellation upto 30th June, 2020 in which event the credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30th June, 2020. Thereafter the value of the credit shell shall be enhanced by 0.75% of the face value per month upto 31st March, 2021.

[Pravasi Legal Cell v. Union of India, 2020 SCC OnLine SC 799, decided on 01.10.2020]

Courtesy- SCC online

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