SC directs Airlines to refund money if credit shell not used

W.P.(C)D.No.109620 etc Background facts and relief sought for in this batch of The pandemic situation of COVID­19 has adversely W.P.(C)D.No.109620 etc of all domestic and international flights was imposed. The flights. There was an issue of refund of air fare during the lockdown period when domestic and international flights’ an advisory to all stake holders in civil aviation sector in the shape of Office Memorandum dated 16th April 2020. The If a passenger has booked a ticket during the first lockdown period for both domestic and international air travel and amount collected without levy of cancellation charge. The refund shall be made within a period of three weeks from the respondent­airlines operating domestic as well as international flights in India in not refunding the full amount wake of restrictions imposed by the Government of India to W.P.(C)D.No.109620 etc A consequential relief is sought to direct the respondents to In this writ petition it is the allegation of the petitioners by Government of India to contain COVID­19 respondents are providing a credit shell with the validity of one year which is in credit shell by the airlines shall be prerogative of the passenger and not a default practice of the airline. While referring to O.M. dated 16.04.2020 issued by the MoCA it is the tickets that were booked during the lockdown period and leaves out the majority of passengers who had booked tickets that by issuing O.M. dated 16.04.2020 the Government has indirectly approved the practice of airlines for providing Credit Shell for the tickets booked before the lockdown was declared W.P.(C)D.No.109620 etc runs contrary to CAR petitioners have sought relief by way of 5. W.P.(C)No.570 of 2020 is filed by Air Passengers litigation under Article 32 of the Constitution of India seeking directions to various airlines operating both domestic and refund the same without levying any charges on account of cancellation etc. In this writ petition also it is the allegation of the petitioner­Association that the CARs have been issued in exercise of powers under provisions of Aircrafts Act 1934 to standards and recommended practices but same is not being airlines in providing ‘Credit Shell’ instead of refunding the full amount collected for the tickets cancelled on account of cancellation of flights is in clear violation of CARs. The petitioner also alleges that the option of holding the refund W.P.(C)D.No.109620 etc the representation filed by it on 24.05.2020 and various actions of the airlines in not refunding the amounts spent by them on air tickets it is alleged that the action of the respondents in withholding the amounts spent by them on air dated 16.04.2020 in refunding the amounts as directed and issuing ‘Credit Shell’ instead of refund. With the aforesaid of restrictions imposed by the Government of India to contain W.P.(C)D.No.109620 etc 05.06.2020 as illegal arbitrary and contrary to CARs. They seek directions to refund the full amount of Rs.1 66 434 ­ collected by no.1 is a senior citizen who has served in Indian Army for 27 New York to New Delhi on 05.06.2020 for an amount of Rs.1 66 434 ­. While referring to the advisory issued by the the Director General of Civil Aviation Government of India for their tickets by seeking refund of the amount. In this writ petition it is the specific case of the petitioners that the O.M directs all airlines to pay full refund without levying any cancellation charges for the bookings made and payment received only during the lockdown period from 25.03.2020 to W.P.(C)D.No.109620 etc 03.05.2020 as illegal. It is alleged that the said Memorandum had booked their tickets to travel to United States of America much earlier to restrictions imposed to control the spread of had booked tickets during the lockdown period and the passengers who had booked tickets earlier petitioners seek denial of legitimate refund to the petitioners by the airlines is patently unfair and also states that the action of the third respondent in offering ‘Credit Shell’ instead of refund is leisure is likely to remain restricted in the foreseeable future Petitioners while pleading that giving ‘Credit Shell’ vouchers them runs contrary to CAR allege that the denial of refund by of the petitioners and similarly placed persons. With the aforesaid allegations petitioners seek quashing of O.M. dated 16.04.2020 with a consequential direction to refund the full amount of Rs.1 66 434 ­ collected by the third respondent for W.P.(C)D.No.109620 etc of India a society registered under the Societies Registration Act 1860 seeking declaration that the action on the part of the airlines operating domestic as well as international flights in travel during the period of ban on air travel as illegal and arbitrary with a consequential direction to the respondents to the Ministry of Civil Aviation and Directorate General of Civil refund on tickets booked for travel during the lockdown on account of their cancellation. It is the allegation of the agents who are the members of the present petitioner. While distinct from passengers who have booked the tickets directly W.P.(C)D.No.109620 etc airlines they are compelling the travel agents passengers to is no certainty in rescheduling the travel plans petitioner­ Federation has questioned the action of the respondents in offering ‘Credit Shell’ and seeks directions for refund of full during the lockdown period and ban imposed on operation of domestic as well as international flights it is the case of the petitioner that non­refund of the amount by airlines for the referring to the CARs issued by DGCA and Rule 133A of the Aircraft Rules it is alleged that holding the refund amount in by leaving vast majority of passengers who had booked tickets W.P.(C)D.No.109620 etc have booked tickets to passengers even before receipt of fare them they will suffer undue hardship. While referring to the situation of pandemic COVID­19 globally it is stated that further unlikely that people will travel for leisure activities in have been received by the airline. It is alleged that such directions would secure fair and expedient justice by avoiding filed by the Pravasi Legal Cell and other subsequent writ Court Airlines were impleaded as the party respondents and intervening in the matter which were allowed by this Court W.P.(C)D.No.109620 etc the impleaded respondents on behalf of the Airlines Travel Agents Federation of India and others who are allowed to be while denying the various allegations made by the petitioners they have explained the existing legal regime with respect to refund of fares and clarified the circumstances which led to issuance of O.M. dated 16.04.2020. While referring to the meetings held by the Ministry of Civil Aviation with the representatives of Airlines the affidavit discloses the concerns highlighted during such meetings and indicated the proposed well as the airlines. The Ministry of Civil Aviation after which were referred to in the affidavit and deals with various situations such as for domestic airlines where tickets were the ticket had been booked on an Indian carrier when the booking is for ex­India and for international travel when the W.P.(C)D.No.109620 etc The supplementary affidavit filed on behalf of respondent nos.1 and 2 further clarified on categories of passengers who are proposed to be covered and clarified the period of booking of tickets and also with regard to the credit said respondents further clarifying with regard to credit shell 10. We have heard Sri Sanjay Hegde learned senior counsel appearing for the petitioner­Pravasi Legal Cell in W.P.(C).Diary No.10966 of 2020 Sri C.A. Sundaram learned senior counsel Jain learned counsel appearing for the petitioners in W.P C)No.952 of 2020 and Sri Harshwardhan Bhende learned of India Sri Arvind P. Datar learned senior counsel appearing for Go Airlines Ltd. Sri Harish N. Salve learned senior counsel appearing for Spicejet Ltd. Sri Mukul Rohtagi learned senior counsel appearing for Interglobe Aviation Ltd. Sri Pinaki Misra learned senior counsel appearing for and Sri Pallav Shishodia learned senior counsel appearing for 11. By considering the grievances amongst the airline passengers on the issue of refund of tickets by airlines the Directorate General of Civil Aviation has issued Civil Aviation in the said requirements when the tickets are purchased by within seven days of cancellation in case of cash transactions is completed within 30 working days. Further directions were issued to the airlines to refund all statutory taxes and User Development Fee Airport Development Fee Passenger Service Similar such Requirements are also issued by and clause 3.3 of the said Requirements deals with the issue relating to ‘cancellation of flight’ and the obligations on the acceptable to the passenger. In ordinary course the said W.P.(C)D.No.109620 etc stake holders while issuing notice this Court vide order dated Issue notice. Mr. Rajat Nair learned counsel Mr. Tushar Mehta learned Solicitor General Learned Solicitor General submits that a suggestion given by Mr. Harish Salve learned be taken by the Ministry of Aviation to do the Liberty is given to the airlines to file counter W.P.(C)D.No.109620 etc video conferencing to discuss issues relating to refund of air fares by airlines. As referred in the affidavit the meeting was Shri Vinay Dubey CEO Go Air Shri Rajiv Bansal CMD Air India Shri K. Shyam Sundar CEO Air India Express Shri V. Hejmadi Director Finance Air India Shri Melwin D’Silva EDAir India Shri Bhaskar Bhat Chairman Vistara 12. Shri Leslie Thng CEO Vistara Shri Moin Wasil HeadVistara W.P.(C)D.No.109620 etc Shri Ankur Garg CCO Air Asia Ms. Priya Mehra HeadIndiGo Shri Sanjay Gupta HeadIndiGo Ministry on 11.07.2020 one with Online Travel Agents and are also placed on record. While explaining the existing legal regime relating to refund of fares it is stated that same is governed by Civil Aviation Requirements which recognise the referring to relevant provisions of the CARs of 22.05.2008 and 06.08.2010 as revised on 27.02.2019 it is stated that for cancellation of flights due to force majeure for every month or part thereof between the date of cancellation and 30th June 2020. Thereafter the value of credit c. The credit shell shall be transferable. The passenger can transfer the credit shell to any person and the airlines shall honour d. By the end of March 2021 the Airlines shall 4. Notwithstanding what is stated above the travellers who have since expired to the W.P.(C)D.No.109620 etc account of the passenger or to his B. For domestic airlines when the ticket has been 1. If the tickets have been booked during the period in all such cases full refund shall be mandated vide MoCA’s OM dated 16th April 2. For all other cases the airlines shall make all endeavours to refund the collected amount 3. If on account of financial distress if the airlines shell equal to the amount of fare collected credit shell up to 31st March 2021 on any shell then he can use cash to top it up. If the credit shell he she can do so and the balance amount of credit shell shall be b. There shall be an incentive mechanism to W.P.(C)D.No.109620 etc of cancellation up to 30th June 2020 the value of credit shell shall be enhanced by 0.5% of the face value for every month or part thereof between the date of cancellation and 30th June 2020. Thereafter the value of credit c. The credit shell shall be transferable. The passenger can transfer the credit shell to any person and the airlines shall honour d. By the end of March 2021 the Airlines shall 4. Notwithstanding what is stated above the booked on an Indian carrier and the booking is 1. If the tickets have been booked during the period in all such cases full refund shall be mandated vide MoCA’s OM dated 16th April W.P.(C)D.No.109620 etc 2. For all other cases the airlines shall make all endeavours to refund the collected amount 3. If on account of financial distress if the airlines shell equal to the amount of fare collected credit shell up to 31st March 2021 on any shell then he can use cash to top it up. If the credit shell he she can do so and the balance amount of credit shell shall be b. There shall be an incentive mechanism to of cancellation up to 30th June 2020 the value of credit shell shall be enhanced by 0.5% of the face value for every month or part thereof between the date of cancellation and 30th June 2020. Thereafter the value of credit c. The credit shell shall be transferable. The passenger can transfer the credit shell to any person and the airlines shall honour W.P.(C)D.No.109620 etc d. By the end of March 2021 the Airlines shall e. Notwithstanding what is stated above the of persons who have since expired. This 1. If the tickets have been booked during the period in all such cases full refund shall be mandated vide MoCA’s OM dated 16th April 2. For all other cases the airlines shall refund the collected amount to the passenger within 15 This amount shall be passed on of passengers who are proposed to be covered under the proposed formulations mentioned in the earlier affidavit it is W.P.(C)D.No.109620 etc Passengers who had booked their tickets Passengers who had booked their tickets through a travel agent for International travel passengers who had booked their ticket on an Indian carrier and International travel passengers who had booked their ticket on a foreign carrier and Though the term ex­India is not defined in the Aircraft Act 1934 and the Aircraft Rules 1937 but in aviation industry this term denotes the flights cases where passengers who have booked the tickets prior to lockdown for travel upto 24th May 2020 and refund of fares to proposed formulation relating to credit shell and incentive scheme. Further passengers who have booked tickets during lockdown for travel during lockdown such category of passengers are entitled for immediate refund of fares by the W.P.(C)D.No.109620 etc of time but for travel after 24th May 2020 it is stated that the operators with regard to credit shell it is stated that in this agent and agent purchases ticket for the passenger and the by tour operator who has paid the money to the airline for that money to the agent then on cancellation of ticket and of passenger and in case passenger utilises the credit shell he 2021 then airline will have to refund the amount as per proposed formulation and money will go back to the same W.P.(C)D.No.109620 etc March 2021 then the airline will have to refund with interest 15. Referring to supplementary affidavit filed on behalf of for the passenger by paying their money which is yet to be was paid to the airline there should not be any difficulty in issuing credit shell in the name of agent the learned Solicitor and 2. In this affidavit it is stated that the existing regulatory W.P.(C)D.No.109620 etc named passenger only can be accounted for in the ‘passenger the best international practices and regulations. The travel agent if any involved in the purchase of any ticket on behalf of any passenger remains only a via­media leaving the principal contract between the airline and the passenger only. Therefore ticket. As such it is stated that credit shell is proposed to be issued in the name of passengers only who have booked their such voucher is not used before 31st March 2021 as per the In view of such formulations which are arrived at during other stake holders airlines etc. it is submitted that substantially their grievances stand resolved but at the same 17. Sri Sanjay Hegde learned senior advocate appearing for the W.P.(C)D.No.109620 etc Sundaram learned senior counsel appearing for the Air mode they have booked all passengers are entitled for refund immediately. It is submitted that the problems faced by the by the passengers. Sri Harshwardhan Bhende learned counsel appearing for the Travel Agents Federation of India has investing their money on behalf of the passengers there is no reason for not issuing credit shell in the name of agents. Sri Pallav Shishodia learned senior counsel appearing for Indian credit shell is not utilised by 31st of March 2021 refund has to W.P.(C)D.No.109620 etc 18. Shri Harish Salve learned senior counsel appearing for mentioned in the affidavit are by and large acceptable to his client. Sri Rohtagi learned senior counsel appearing for Indigo by drawing our attention to the detailed affidavit filed on its that in developed countries airline industry has been able to otherwise including dispensations from refunds). However no comparable measures have yet been introduced in India. By referring to facts and figures as mentioned in the affidavit W.P.(C)D.No.109620 etc worst affected sectors on account of pandemic COVID­19 the economic performance of the airline industry. In its report after predicting a world­wide US$ 434 billion drop in airline revenue and related indirect tax receipts and a 50.6% fall in contract by 5.0% in 2020 COVID­19 will have a significant worst year in the history of airlines with net losses of $84.3 Referring to the severe liquidity crunch faced by airlines it is 2021 it is not possible to refund the money as ordered and learned counsel has requested to extend the time to encash sides and at the same time the suggestions formulations as on cancellation of tickets are governed by the Civil Aviation Requirements i.e. CAR dated 22nd May 2008 06th August 2010 W.P.(C)D.No.109620 etc the provisions of Aircrafts Act 1934 and the Rules made the civil aviation sector which is one of the important sectors is enforcement action of the CARs would further restrict reduce their operations and such enforcement action may further can further adversely affect delay the refund cycle. Strict by this Court by issuing appropriate directions wherever W.P.(C)D.No.109620 etc safeguarded. Sri Arvind Datar learned senior counsel though are not inclined to accept the same keeping in mind that the passengers who with the hope of travel have booked their deem it appropriate to dispose of this batch of cases with the lockdown periodfor travel during lockdown period and the by the passenger against that booking being cancelled the airline shall refund the full amount collected without any cancellation charges. The If the tickets have been booked during the 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 W.P.(C)D.No.109620 etc have been booked on an Indian carrier and the during the lockdown period for travel within the If the tickets are booked for international during the lockdown period for travel within the lockdown period full refund shall be given by the airlines and said amount shall be passed on immediately by the agent to the passengers all other cases airline shall refund the collected amount to the passenger within a period of three endeavours to refund the collected amount to the 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 by the passenger or through travel agent so as to W.P.(C)D.No.109620 etc shell upto 31st March 2021 on any route of his to any person including the travel agent through whom he she has booked the ticket and the The credit shell issued in the name of the 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 the concerned agent through whom the ticket is booked for third party use. It is also made clear In cases where passengers have purchased the ticket through an agent and credit shell is the ticket. In cases where tickets are booked the passenger which is not utilized by 31st March shall be an incentive to compensate the passenger which event the credit shell shall be enhanced by W.P.(C)D.No.109620 etc cancellation and 30th June 2020. Thereafter the Further the second respondent­Directorate shall ensure strict 20. With the above directions these writ petitions are disposed

Summary: In the case of Pravasi Legal Cell &amp; Ors. Vs Union of India &amp; Ors. [DIARY NO.10966/2020], Supreme Court directed all the airlines to refund the whole ticket amount to the passengers. Various petitions have been filed in the nature of public interest litigation under Article 32 of the Constitution of India, seeking directions to various airlines operating both – domestic and international flights – to refund the ticket amounts collected from the passengers of the flights which are cancelled on account of lockdown, with a consequential direction to the respondents to refund the same without levying any charges on account of cancellation etc. Hence, a consolidated hearing was done to dispose the matter. In the view of lockdown, a ban on operation of all domestic and international flights was imposed. The Ministry of Civil Aviation issued an advisory stating that the Airline shall refund the full amount collected without levy of cancellation charge. In the same memorandum, Government had issued directions to Directorate General of Civil Aviation to monitor the compliance of such advisories. The contention of the petitioner’s is that although it is obligatory on the part of the respondent-airlines, operating domestic as well as international flights, to refund the full amount collected for the tickets which are not utilised in view of the cancellation of flights in the wake of restrictions imposed by Government of India to contain COVID19, respondents are providing a credit shell with the validity of one year, which is contrary to Civil Aviation Requirements (CAR) of May 2008. The respondent- airlines submitted that if any enforcement action is initiated by the DGCA for violations of CARs mentioned above, same may result in reduction/suspension of approved schedule of airline, who have already started operating their flights with limited capacity. It was submitted that any such strict enforcement action against airline would further restrict/reduce their operation and any such strict enforcement action may further jeopardise the possibility of generation of cash by the airline which can further adversely affect/delay the refund cycle. Keeping a considerate view towards both the passenger and the airline, Supreme Court gave the following directions – 1. If a passenger has booked a ticket during the lockdown period (from 25 March, 2020 to 24  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 a 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 24 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 exIndia, if the tickets have been booked during the lockdown period for travel within the lockdown period, immediate refund shall be made. 5. If the tickets are booked for international travel on a foreign carrier and the booking is exIndia during the lockdown period for travel within the lockdown period, 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 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 passenger when the booking is done either directly by the passenger or through 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 shell upto 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. 6.1 The credit shell issued in the name of the passenger shall be transferable which can be utilized 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. 7. 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. 8. In all cases where credit shell is issued there shall be an incentive to compensate the passenger from the date of cancellation up-to 30 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 up-to 31 March, 2021.”