IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI TUESDAY, THE 28TH OCTOBER 2008 / 6TH KARTHIKA 1930 WP(C).No. 20236 of 2008(H) --------------------------------------- PETITIONERS: --------------------- 1. IATA AGENTS ASSOCIATION OF INDIA, C/O.SPEEDWINGS TRAVEL & CARGO (P) LTD., SREEKANDATH ROAD, RAVIPURAM, COCHIN - 682 016, REPRESENTED BY ITS GENERAL SECRETARY, NARESH RAJKOTIA. 2. SKYWORLD TRAVELS PVT. LTD, CRYSTAL COMPLEX, BANERJI ROAD, COCHIN - 31, REPRESENTED BY ITS MANAGING DIRECTOR, JOHNSON M.P. BY ADV. SRI.SUNIL JACOB JOSE. RESPONDENTS: ----------------------- 1. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF CIVIL AVIATION, NEW DELHI. 2. THE DIRECTOR GENERAL OF CIVIL AVIATION, REPRESENTED BY ITS DIRECTOR GENERAL, NEW DELHI. 3. NATIONAL AVIATION CO. OF INDIA LTD., AIR INDIA BUILDING, NARIMAN POINT, MUMBAI, REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR. R1 BY SRI.P.PARAMESWARAN NAIR,ASST.S.G, R3 BY ADV. SRI.JOSEPH KODIANTHARA, ADV. SRI.MATHEWS K.UTHUPPACHAN, ADV. SRI.BINU MATHEW, ADV. SRI.TERRY V.JAMES. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/10/2008,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C). NO.20236/2008-H: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE LETTER ADDRESSED TO PRESIDENT OF THE P.1. ASSOCIATION ON 07/04/05 BY THE R.3. EXT.P.2: COPY OF THE PROPOSAL DTD. 09/04/05 SUBMITTED BEFORE THE R.3. EXT.P.3: COPY OF THE LETTER BY THE R.3. TO THE PETITIONER DTD. 27/04/05. EXT.P.4: COPY OF THE LETTER DTD. 23/05/05 OF THE P.1. TO THE R.3. EXT.P.5: COPY OF THE REPRESENTATION DTD. 17/12/07 OF THE P.1. BEFORE THE R.3. EXT.P.6: COPY OF THE REPRESENTATION OF THE P.1. DTD. 06/06/08. EXT.P.7: COPY OF THE LETTER DTD. 20/06/08 ISSUED BY THE R.3. EXT.P.8: COPY OF THE NEWS ITEM THAT APPEARED IN THE HINDU ON 24/06/08. RESPONDENTS' EXHIBITS: EXT.R3.A: COPY OF THE AGREEMENT DTD. 30/04/1998 BETWEEN IATA AND M/S. JAYBEE TRAVELS. EXT.R3.B: COPY OF THE JUDGEMENT DTD. 20/12/2007 OF THE HONOURABLE HIGH COURT OF KARNATAKA IN W.P. NOS. 12368/2005 AND 14978/2005. EXT.R3.C: COPY OF THE LETTER DTD. 13/06/2008 FROM THE R.3. TO THE R.2. EXT.R3.D: COPY OF THE LETTER DTD. 18/06/2008 FROM THE R.2. TO THE R.3. EXT.R3.E: COPY OF THE LETTER DTD. 20/06/2008 FROM THE R.3. TO THE PRESIDENT, TRAVEL AGENTS FEDERATION OF INDIA, MUMBAI. EXT.R3.F: COPY OF THE LETTER DTD. 20/06/2008 FROM THE R.3. TO THE PRESIDENT, TRAVEL AGENTS ASSOCIATION OF INDIA, MUMBAI. EXT.R3.G: COPY OF THE LETTER DTD. 21/06/08 FROM M/S. JET AIRWAYS TO ALL IATA AGENTS. EXT.R3.H: COPY OF THE LETTER DTD. 23/06/08 FROM M/S. KING FISHER AIRLINES TO ALL IATA AGENTS. EXT.R3.I: COPY OF THE LETTER DTD. 01/08/08 FROM THE R.3. TO THE PRESIDENT, TRAVEL AGENTS FEDERATION OF INDIA, MUMBAI. W.P.(C). NO.20236/2008-H: EXT.R3.J: COPY OF THE LETTER DTD. 01/08/2008 FROM THE R.3. TO THE PRESIDENT, TRAVEL AGENTS ASSOCIATION OF INDIA, MUMBAI. EXT.R3.K: COPY OF THE LETTER DTD. 01/08/2008 FROM THE R.3. TO THE PRESIDENT, IATA AGENTS ASSOCIATION OF INDIA, KOCHI. //TRUE COPY// P.S. TO JUDGE. prv. V.GIRI, J ------------------- W.P.(C).20236/2008 -------------------- Dated this the 28th day of October, 2008 JUDGMENT Petitioners challenge Ext.P7 communication issued by the third respondent and also seek a writ of mandamus compelling the third respondent to further act in terms of Ext.P3, an earlier communication issued by the same authority. First petitioner is an Association of Travel Agents, which claims to represent 700 members who are engaged in the field of air travel ticketing, tour operation and allied fields. Second petitioner is a member of the first petitioner- Association. Petitioners submit that the Airlines all around the world are following the system of paying a commission to the travel agents as remuneration for the sale of air tickets and also for what the agents term as ancillary services. Commission was earlier payable at 9% of the ticket charges. But same was later reduced to 5% in the year 2005. The reduction in the commission so payable, was objected to by the first petitioner-Association and other Associations as well. W.P.(C).20236/2008 2 It seems that by Ext.P2, a proposal was mooted by the first petitioner-Association for constituting a Sub Committee of Air Lines members and Travel Agents to look into different aspects and come out with a comprehensive package in this regard. By Ext.P3 communication issued on behalf of Air India, it was intimated that the rate of commission was reduced to 5% and that the same shall be held firm for a period of four years from 1.5.2005. It seems that responding to Ext.P3 dated 27.4.2005, the first petitioner-Association by Ext.P4 dated 23.5.2005 informed the third respondent of the nominees of the first petitioner-Association for the proposed Special Committee. In the meanwhile, commission was continued to be paid at 5%. Petitioners have a grievance that the Sub Committee was not constituted and while so, Ext.P7 was issued informing the first petitioner-Association that consequent upon the changes being witnessed globally, the Air Lines in India are struggling hard to survive with bottom lines of almost all carriers being in red. In the circumstances, W.P.(C).20236/2008 3 invoking the powers made available under the Passenger Agency Conference Resolutions 810i and 810d, third respondent intimated that they will reduce the existing standard agency commission from 5% to 0%, on all Domestic and International tickets issued on NACIL network. The change was to be enforced with effect from 1.10.2008. It is now admitted that this has now been deferred to 1.11.2008. 2. Ext.P7 further proceeds to intimate that travel agents in the circumstances, will be at liberty to charge a transaction fee from the clients directly. Ext.P7 has been challenged in this writ petition inter alia on the ground that the third respondent acted illegally in resiling from the promise held out by Ext.P3 that the decision at any rate is arbitrary, hit by the Doctrine of promissory Estoppal, and the same requires interference by this Court. 3. Counter affidavit has been filed by the third W.P.(C).20236/2008 4 respondent supporting Ext.P7. It is further contended that members of the first petitioner-Association including the second petitioner have an efficacious alternate remedy by way of resolution by the Passenger Agency Commissioner in the first instance, followed by a review, by an arbitrator in terms of Passenger Sales Agency Agreement and, therefore, the remedy under Article 226 of the Constitution of India, may not be appropriate. It is further contended that at any rate, the decision taken by the third respondent as evidenced by Ext.P7, was for imminent commercial reasons and in consonance with a similar decision taken by other Air Lines operating on Domestic and International Sectors. 4. Reply affidavit has been filed by the petitioners. 5. I heard Mr.Sunil Jacob Jose, learned counsel for the petitioners and Mr.Joseph Kodianthara, learned counsel appearing for the third respondent. W.P.(C).20236/2008 5 6. Mr.Joseph Kodianthara submitted that there is an efficacious alternate remedy available to the petitioners under the Passenger Agency Agreement, which is executed by each member of the first petitioner- Association including the second petitioner with IATA represented by its Director General. Specimen agreement, Ext.R3(a), is produced. Ext.R3(a) is a re- production of Resolution No.824 contained in the Passenger Agency Conference Resolutions Manual. Ext.R3(a) would show that the Passenger Sales Agency Agreement (hereinafter referred to as ‘Agency Agreement’) is executed between the travel agent and each IATA member which appoints the Agent represented by the Director General of IATA acting on behalf of such Member. Agreement is executed between the Agent and the Carrier upon appointment of the Agent by such carrier, in accordance with the Sales Agency Rules. Clause 14 of Ext.R3(a) ( i.e Resolution No.824) reads as follows:- W.P.(C).20236/2008 6 If any matter is reviewed by arbitration pursuant to the Sales Agency Rules, the Agent hereby submits to arbitration in accordance with such Rules and agrees to observe the procedures therein provided and to abide by any arbitration award made thereunder.” 7. Reference will also have to be made to Resolution No.820(e), which provides for the Travel Agency Commissioner (referred to as 'the Commissioner') to conduct reviews and act with respect to decisions and/or action affecting Agents and applicants under the Agency Programme. In terms of clause 1.1.9 of Resolution No.820(e), an Agent who is aggrieved by an impending amendment to its Passenger Sales Agency Agreement, is entitled to seek review by the Commissioner. Section 4 of Resolution No.820(e) provides for review by arbitration. Clause 4.1 reads as follows:- “An Agent or applicant which considers itself aggrieved by a decision of W.P.(C).20236/2008 7 the Commissioner taken under the provisions of this Resolution, shall have the right to have such decision reviewed by arbitration, in accordance with the procedures set out in the Passenger Sales Agency Rules”. 8. The applicability of the Resolution taken by the IATA from time to time form part of the Passenger Agency Conference Resolutions, to the Agency Agreement is provided under clause 2 of the Passenger Agency Agreement which makes it clear that the terms and conditions governing relationship between the carrier and the Agent are set forth in the Resolutions contained in Travel Agents’ Handbook published from time to time under the authority of the Agency Administrator. In the circumstances, a reduction of the agency Commission, which would amount to an amendment to the Agency Agreement in so far as it relates to the rate of commission payable to the agent would, if the agent is desirous, give rise to a dispute W.P.(C).20236/2008 8 within the meaning of Resolution No.820(e) and the Agency Agreement. It is open to a review by the Commissioner in the first instance and thereafter, a review by an Arbitrator at the instance of the aggrieved person or persons, as the case may be. 9. I do not find any material indicating that this alternate dispute resolution as provided in the Agreement read with Manual of Resolutions is either inefficacious or inappropriate. In the circumstances, there is no factor which stands in the way of members of the first petitioner-Association seeking a review by the Commissioner in the first instance and thereafter, seeking a review by the arbitrator, if necessary in terms of the Agency Agreement. Proceedings under Article 226 of the Constitution, would not, in my opinion, be either a substitute for a review which is contemplated by the Agreement or otherwise required in the circumstances of the case. W.P.(C).20236/2008 9 10. The aforementioned, in my view, would suffice to decline jurisdiction to the petitioners. But out of deference to the submissions made by the learned counsel for the petitioners and learned counsel for the third respondent, I also proceed to consider the contentions of the petitioners on merits. 11. Petitioners’ grievance emanates from the fact that the third respondent, Carrier, has taken a commercial decision to reduce the Agency Agreement from 5% to 0%. Mr.Sunil Jose contends that assuming that the third respondent is entitled to revise the Agency Agreement, there is no warrant for advancing such revision from 1st May, 2009 and 1st November, 2008. Essentially, the Commission payable is treated as consideration for the services rendered by the agent to the Carrier. The travel agent is therefore, required to rendering its services for nil consideration. This, he contends is not an attitude that is expected from an instrumentality of the state. W.P.(C).20236/2008 10 12. Counsel for the third respondent submits that these are trying times for any Carrier including the third respondent and the decision to reduce the Commission was taken on purely commercial parameters. Similar decision has been taken by other Air Lines namely King Fisher, Jet Airways etc. They does not seem to have met any significant objection in this regard from the first petitioner-Association. At any rate, the decision taken is on commercial parameters and if at all the remedy available to the petitioner would be before the forum competent to decide contractual disputes. There is no statutory infraction involved. Therefore, proceedings under Article 226 of the Constitution of India would be inappropriate. At any rate, if the agent feels that the terms of the Agency are proved to be onerous, he is at liberty to reside from the Agreement. If he feels that there has been an illegal breach of contract, his remedy is to sue for damages or compensation and not for a specific performance of the Agency agreement. W.P.(C).20236/2008 11 13. Indisputably the relationship between the parties is contractual. Agreement in question is neither statutory nor does it have any statutory backing as such. No infraction of any statutory provision is pleaded or made out. It is open to the third respondent to manage its affairs in such a manner that it continues to discharge its functions profitably. In doing so, no doubt, it is required to keep in mind the terms of any Agreement which might be entered into with third parties. The objection raised by the petitioners is rested on what it perceives as a binding obligation of the third respondent to remain firm with the rate of commission at 5% at least till 1st May, 2009. I am afraid Ext.P3 cannot be considered as a binding contract between the members of the first petitioner-Association and the third respondent. 14. The Doctrine of Promissory Estoppal may not really available to the petitioners in the instant case. At any rate, assuming that the members of the first petitioner- W.P.(C).20236/2008 12 Association had proceeded on the strength of Ext.P3, I am of the view that sufficient time has been afforded by the third respondent to bring into force the amended structure contemplated by Ext.P3. I am not in a position to discern any undue haste in the implementation of the decision to reduce the commission payable. 15. I am also inclined to accept the submission of the third respondent that the Agency Agreement as such may not be capable of specific performance and an interference with Ext.P7 at this juncture by this Court cannot have the effect of compelling the third respondent to continue with the Agency Agreement on terms which are not completely acceptable. It is always open to an agent citing the amended terms, allegedly imposed unilaterally by the third respondent as either resulting in a frustration of the contract or rendering it impossible of performance. These are matters to be adjudicated and resolved by a competent Civil Court. W.P.(C).20236/2008 13 16. I also take note of the submission made by the counsel for the third respondent that the provision for a transaction fee which is made available to the Travel Agent, though not an ample substitute for a commission would, to some extent, alleviate the hardship if any, that is caused to the members of the Association. It is upto them to take a decision. 17. In the ultimate analysis, what is involved is a commercial decision. This Court would be reluctant to interfere, unless statutory infraction or gross violation of any fundamental right is demonstrated. For all these reasons, I do not find any merit in this writ petition. Accordingly the same is dismissed. V.GIRI, Judge mrcs