Pravasi Legal Cell vs Union Of India on 1 October, 2020


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Supreme Court of India

Pravasi Legal Cell vs Union Of India on 1 October, 2020

Author: Ashok Bhushan

Bench: Ashok Bhushan, R. Subhash Reddy, M.R. Shah

W.P.(C)D.No.10966 of 2020 etc.



                                                                                REPORTABLE

                                           IN THE SUPREME COURT OF INDIA

                                             CIVIL ORIGINAL JURISDICTION

                                        WRIT PETITION (C) NO.        OF 2020
                                               [DIARY NO.10966/2020]

                             Pravasi Legal Cell & Ors.                          …..Petitioners

                                                          Versus

                             Union of India & Ors.                            …..Respondents


                                                          WITH

                                          WRIT PETITION (C) NO.570 OF 2020;
                                          WRIT PETITION (C) NO.595 OF 2020;
                                                        AND
                                          WRIT PETITION (C) NO.952 OF 2020




                                                     JUDGMENT

R. Subhash Reddy, J.

1. Background facts, and relief sought for, in this batch of

cases is similar, as such all these cases are heard together and

are being disposed of by this common judgment.

Signature Not Verified 2. The pandemic situation of COVID­19, has adversely
Digitally signed by
MEENAKSHI KOHLI
Date: 2020.10.01
10:50:03 IST
Reason: affected the economy globally, in several sectors. Our country –

India – and civil aviation sector is not an exception to the same.

1
W.P.(C)D.No.10966 of 2020 etc.

To contain the pandemic situation of COVID­19, first lockdown

was imposed by the Government of India, from 25 th March 2020

to 14th April 2020. In view of such lockdown, a ban on operation

of all domestic and international flights was imposed. The

lockdown period was further extended upto 03rd May 2020, with

the ban continuing on operation of all domestic and international

flights. There was an issue of refund of air fare 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 COVID­19

and its consequential effect on the air passengers and airlines, by

examining the grievances received from various quarters, issued

an advisory to all stake holders in civil aviation sector in the

shape of Office Memorandum dated 16th April 2020. The

advisory issued read as under:

“3. … … … …

(i) If a passenger has booked a ticket during
the first lockdown period (from 25 th of
March to 14 of April, 2020) and the airline
has received payment for booking of the air
ticket during the first lockdown period for
travel during the same period, for both
domestic and international air travel and
refund is sought by the passenger against
that booking being cancelled, the Airline
shall refund the full amount collected
without levy of cancellation charge. The
refund shall be made within a period of
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W.P.(C)D.No.10966 of 2020 etc.

three weeks from the date of request of
cancellation.

(ii) If a passenger has booked a ticket during
the first lockdown period and the airline
has received the payment for booking of air
ticket during first lockdown period (from
25th of March to 14th of April 2020) for travel
during the second lockdown period (from
15th of April to 3rd of May, 2020) for both
domestic and international air travel and
the passenger seeks refund on cancellation
of the ticket, the Airline shall refund the full
amount collected without levy of
cancellation charge. The refund shall be
made within a period of three weeks from
the date of request of cancellation.”

In the same Memorandum, Government has issued directions to

Directorate General of Civil Aviation to monitor the compliance of

such advisories referred above.

3. Writ Petition(C) being Diary No.10966 of 2020 is filed by a

society registered under Societies Registration Act, 1860 by way

of public interest litigation, to declare the action on the part of

the respondent­airlines, operating domestic 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 COVID­19 as arbitrary and in violation of Civil Aviation

Requirements, issued by the Directorate General of Civil Aviation.

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W.P.(C)D.No.10966 of 2020 etc.

A consequential relief is sought to direct the respondents to

refund the full amount upon such cancellations.

4. In this writ petition, it is the allegation of the petitioners

that though it is obligatory on the part of the respondent­airlines,

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. It is

alleged that as per the CAR, the option of holding refund amount

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

alleged that the said Memorandum deals only with the refund for

the tickets that were booked during the lockdown period and

leaves out the majority of passengers who had booked tickets

before the flights were banned. It is the case of the petitioners

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

and the same is in violation of CAR. By further alleging that the

time lines for refund as mentioned in the O.M. dated 16.04.2020
4
W.P.(C)D.No.10966 of 2020 etc.

runs contrary to CAR, petitioners have sought relief by way of

directions to the respondents to refund full amount collected for

the tickets booked, any time for travel.

5. W.P.(C)No.570 of 2020 is filed by Air Passengers

Association of India, which is also 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. 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

implement the Convention relating to International Civil Aviation

standards and recommended practices but same is not being

followed to refund the fare amount in view of the cancellation of

flights. By further detailing the dates of lockdown declared by

the Government, it is alleged that the action on the part of the

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
5
W.P.(C)D.No.10966 of 2020 etc.

amount in ‘Credit Shell’ by the airline shall be the prerogative of

passenger not a default practice of the airline. While referring to

the representation filed by it on 24.05.2020, and various

complaints received from the numerous passengers regarding the

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

tickets is illegal and contrary to CAR. In this writ petition it is

alleged that the several airlines are not acting as per the O.M.

dated 16.04.2020 in refunding the amounts as directed and

issuing ‘Credit Shell’ instead of refund. With the aforesaid

allegations, petitioner also seeks directions by way of declaration

that the actions on the part of the airlines, which are operating

domestic as well as international flights, in not refunding the full

amount for the tickets due to cancellation of flights in the wake

of restrictions imposed by the Government of India to contain

COVID­19 is arbitrary and illegal with a consequential direction

to refund the same.

6. W.P.(C)No.952 of 2020 is filed by Col. Ashok Prehar (Retd.)

and another seeking quashing of O.M. dated 16.04.2020 issued

by the Ministry of Civil Aviation and also seeking a declaration

that the denial of refund by the third respondent – Air India Ltd.

– for tickets booked by them on 18.12.2019 to travel to United
6
W.P.(C)D.No.10966 of 2020 etc.

States of America on 08.05.2020 with a return ticket to India on

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

respondent no.3 for the tickets booked by them on 18.12.2019.

In this writ petition it is the case of the petitioners that, petitioner

no.1 is a senior citizen who has served in Indian Army for 27

years and retired as a Colonel and the petitioner no.2 is his wife

and on 18.12.2019 they have booked tickets to Air India Flight

No.AI­173 to travel to San Francisco, United States of America

from New Delhi on 08.05.2020 with a return flight AI­102 from

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

United States of America, by way of Advisory dated 19.03.2020

recommending to avoid any travel and the proceedings issued by

the Director General of Civil Aviation, Government of India for

banning flights during the lockdown period, it is alleged that in

view of cancellation of flights they had no option but to cancel

their tickets by seeking refund of the amount. In this writ

petition it is the specific case of the petitioners that the O.M.

dated 16.04.2020 issued by the Ministry of Civil Aviation, which

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

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W.P.(C)D.No.10966 of 2020 etc.

03.05.2020, as illegal. It is alleged that the said Memorandum

leaves out a majority of passengers including the petitioners who

had booked their tickets to travel to United States of America,

much earlier to restrictions imposed to control the spread of

CORONA virus. Pleading discrimination for the passengers who

had booked tickets during the lockdown period, and the

passengers who had booked tickets earlier, petitioners seek

quashing of O.M. dated 16.04.2020 by further declaration that

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

unreasonable and unjustified. It is also pleaded that in view of

their age and the pandemic situation in the world, the travel for

leisure is likely to remain restricted in the foreseeable future.

Petitioners, while pleading that giving ‘Credit Shell’ vouchers

without refunding the full fare to the petitioners, as sought by

them, runs contrary to CAR, allege that the denial of refund by

third respondent amounts to unjust enrichment at the expense

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

the flights booked by them on 18.12.2019.

8
W.P.(C)D.No.10966 of 2020 etc.

7. W.P.(C)No.595 of 2020 is filed by Travel Agents Federation

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

India, in refusing to refund the full amount collected for tickets to

travel during the period of ban on air travel, as illegal and

arbitrary with a consequential direction to the respondents to

facilitate refunds of the amounts received by the airlines towards

the booking of tickets during the period of ban on air travel. In

this writ petition, petitioner­Federation seeks directions against

the Ministry of Civil Aviation and Directorate General of Civil

Aviation, for issuance of appropriate directions to airlines for full

refund on tickets booked for travel during the lockdown on

account of their cancellation. It is the allegation of the

petitioners that there are certain ambiguities in the O.M. dated

16.04.2020 and 19.04.2020, which are being used by the airlines

to avoid payment of refund, as sought by the passengers towards

the cancellation of flights. In writ petition, it is stated that there

are many passengers who had booked their flights through travel

agents who are the members of the present petitioner. While

stating that the flight booking process through travel agents is

distinct from passengers who have booked the tickets directly

from the airline. It is the allegation of the petitioner that instead

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W.P.(C)D.No.10966 of 2020 etc.

of refunding the amount deposited by the travel agents with the

airlines they are compelling the travel agents/passengers to

accept the facility of ‘Credit Shell’, which compels the bookings to

be rescheduled instead of cancellation. While pleading that there

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

amount in lieu of cancellation of tickets. In the writ petition, by

giving details of various orders passed by the Government and

also the Directorate General of Civil Aviation banning the flights

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

tickets due to cancellation, is illegal and contrary to CAR. While

referring to the CARs issued by DGCA and Rule 133A of the

Aircraft Rules, it is alleged that holding the refund amount in

credit shell by the airlines is the prerogative of the passenger and

not a default practice of the airline. With reference to O.M. dated

16.04.2020 issued by the MoCA, it is the case of the petitioner

that the said Memorandum directs the airlines to refund value of

only those tickets that were booked during the lockdown period

by leaving vast majority of passengers who had booked tickets

before the flights were banned and also on the tickets which are

10
W.P.(C)D.No.10966 of 2020 etc.

booked by the travel agents. It is the case of the petitioner that

as per the practice in vogue there are several travel agents who

have booked tickets to passengers even before receipt of fare

amount from the passengers and if the refunds are not made to

them, they will suffer undue hardship. While referring to the

situation of pandemic COVID­19 globally, it is stated that

tourism industry is suffering from great financial losses and it is

further unlikely that people will travel for leisure activities in

near future, until the spread of COVID­19 is contained fully. It is

the case of the petitioner that where the tickets are booked by

travel agents from their account, refund should be made in the

same manner and channel through which payments for tickets

have been received by the airline. It is alleged that such

directions would secure fair and expedient justice by avoiding

locking up of funds of the passengers as well as the members of

the petitioner­Federation.

8. The first Writ Petition (C) being Diary No.10966 of 2020 is

filed by the Pravasi Legal Cell and other subsequent writ

petitions are also tagged with the same. Pursuant to order of this

Court, Airlines were impleaded as the party respondents, and

some Airlines and others have filed applications on their own for

intervening in the matter which were allowed by this Court.

Common affidavit was filed on behalf of respondents nos.1 and 2
11
W.P.(C)D.No.10966 of 2020 etc.

– Union of India and Directorate General of Civil Aviation in the

abovementioned writ petition. Individual affidavits were filed by

the impleaded respondents on behalf of the Airlines; Travel

Agents Federation of India and others who are allowed to be

impleaded as party respondents.

9. In the affidavit filed on behalf of respondent nos.1 and 2

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

workable solutions keeping in view the interests of passengers as

well as the airlines. The Ministry of Civil Aviation after

consulting all the stake holders arrived at certain formulations,

which were referred to in the affidavit and deals with various

situations, such as, for domestic airlines where tickets were

booked by the passengers directly with the airline; for domestic

airlines when the ticket had been booked through a travel agent,

by the passenger with the airlines; for international travel when

the ticket had been booked on an Indian carrier, when the

booking is for ex­India; and for international travel when the
12
W.P.(C)D.No.10966 of 2020 etc.

tickets have been booked on a foreign carrier and the booking is

ex­India. 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

shell. Further additional affidavit is also filed on behalf of the

said respondents further clarifying with regard to credit shell

proposals as proposed by the Government which were referred to

in the earlier affidavits. Detailed affidavits are filed on behalf of

the airlines and other stake holders who are impleaded as party

respondents.

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

appearing for the petitioner in W.P.(C)No.570 of 2020; Ms. Sonal

Jain, learned counsel appearing for the petitioners in W.P.

(C)No.952 of 2020 and Sri Harshwardhan Bhende, learned

counsel appearing for the Travel Agents Federation of India; Sri

Tushar Mehta, learned Solicitor General appearing for the Union

of India; Sri Arvind P. Datar, learned senior counsel appearing for

Go Airlines (India) Ltd.; Sri Harish N. Salve, learned senior

counsel appearing for Spicejet Ltd.; Sri Mukul Rohtagi, learned

senior counsel appearing for Interglobe Aviation Ltd. (Indigo
13
W.P.(C)D.No.10966 of 2020 etc.

Airline); Sri Pinaki Misra, learned senior counsel appearing for

Tata SIA Airlines Ltd. (Vistara Airlines) and Air Asia India Ltd.

and Sri Pallav Shishodia, learned senior counsel appearing for

the Indian Association of Tour Operators.

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

Requirements by proceedings dated 22nd May 2008. As indicated

in the said requirements when the tickets are purchased by

means of credit card payments, refund shall be made by airlines

within seven days of cancellation; in case of cash transactions

refund shall be made immediately; in case of purchase of tickets

through travel agents airline shall ensure that the refund process

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

Fee to the passengers in case of cancellation/non­utilisation of

tickets. Similar such Requirements are also issued by

proceedings dated 06.08.2010 which were revised on 27.02.2019

and clause 3.3 of the said Requirements deals with the issue

relating to ‘cancellation of flight’ and the obligations on the

airliner either to offer an alternate flight or refund the ticket as

acceptable to the passenger. In ordinary course the said
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W.P.(C)D.No.10966 of 2020 etc.

requirements are to be followed by the airliner whenever there is

a cancellation of tickets.

12. In view of peculiar situation which has arisen on account of

pandemic COVID­19, to resolve the issues raised by the various

stake holders, while issuing notice this Court vide order dated

12.06.2020 has passed the following order :

“… … … …
WRIT PETITION(CIVIL) .. Diary No.(s).10966/2020
Issue notice. Mr. Rajat Nair, learned counsel
accepts notice on behalf of the Union of India.
Let notice be issued to the other respondents.
Mr. Tushar Mehta, learned Solicitor General
appearing for the Union of India may file counter
affidavit to the writ petition within two weeks from
today.

Learned Solicitor General submits that a
suggestion given by Mr. Harish Salve, learned
senior counsel that the Ministry of Aviation shall
call for a meeting with the airlines and sort out all
the issues is a welcome suggestion and steps shall
be taken by the Ministry of Aviation to do the
needful.

Liberty is given to the airlines to file counter
affidavit within three weeks.

… … … …”

13. In the affidavit filed on behalf of respondent nos.1 and 2 in

compliance of order dated 12.06.2020, filed by Director General

of Civil Aviation it is stated that after the order dated 12.06.2020

passed by this Court, a meeting was held on 02.07.2020 at 17:00

Hrs. under the Chairmanship of Secretary, Civil Aviation through
15
W.P.(C)D.No.10966 of 2020 etc.

video conferencing, to discuss issues relating to refund of air

fares by airlines. As referred in the affidavit, the meeting was

attended by the following participants:

Name and Designation

MoCA:

Shri Pradeep Singh Kharola, Secretary

1.

Smt. Usha Padhee, Joint Secretary

2.

Shri Amit Kumar Jha, SO

3.

4. Shri Avinav Tiwari, ASO

DGCA:

Shri Arun Kumar, DG

5.

Airlines:­

Shri Vinay Dubey, CEO, Go Air

6.

Shri Rajiv Bansal, CMD, Air India

7.

Shri K. Shyam Sundar, CEO, Air India Express

8.

Shri V. Hejmadi, Director Finance, Air India

9.

Shri Melwin D’Silva, ED (Commercial), Air India

10.

Shri Bhaskar Bhat, Chairman, Vistara

11.

12. Shri Leslie Thng, CEO, Vistara

Shri Moin Wasil, Head (Regulations), Vistara

13.

16
W.P.(C)D.No.10966 of 2020 etc.

Shri Ankur Garg, CCO, Air Asia

14.

Ms. Priya Mehra, Head (Legal), IndiGo

15.

Shri Sanjay Gupta, Head (Commercial), IndiGo

16.

Shri Chandan Sand, Spicejet

17.

A copy of the Minutes of the meeting dated 02.07.2020 is also

placed on record. Thereafter further follow­up meeting was held

on 08.07.2020. By referring to two more meetings held by the

Ministry on 11.07.2020 – one with Online Travel Agents and

other with TAAI/TAFI representatives, minutes of such meeting

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

rights of air passengers to seek refund of their air tickets. While

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 (extraordinary

circumstances beyond the control of airline), though airline is not

obligated to pay any compensation but it is obligated to refund

the fare to the passengers. At the same time while referring to

the meetings held by the respondent nos.1 and 2 concerning the

issues which are raised by the passengers as well as the airlines,

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W.P.(C)D.No.10966 of 2020 etc.

and other stake holders it is stated 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 is stated 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. As

suggested by the respondents, the workable solutions keeping in

view the interests of both passengers as well as airlines the

following formulations are arrived at to harmonise the interests of

passengers and the viability of airlines to an extent. The said

formulations read as under:

“Formulations based on the discussions with
scheduled domestic airlines on refund of air fare
­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
A. For domestic airlines when the ticket has been
booked directly by the passenger with the airline.

1. If the tickets have been booked during the first
lockdown period, i.e. 25th of March, 2020 to
14th of April, 2020 for the journeys to be
undertaken in both first and second lockdown
period i.e. from 25th of March, 2020 to 3rd of
May, 2020, in all such cases, full refund shall
be given by the airlines immediately (this is
being mandated vide MoCA’s OM dated 16TH
April, 2020 as the airlines were not supposed
to book such tickets).

18

W.P.(C)D.No.10966 of 2020 etc.

2. For all other cases, the airlines shall make all
endeavours to refund the collected amount to
the passenger within 15 days.

3. If on account of financial distress, if the airlines
are not able to do so they shall provide a credit
shell equal to the amount of fare collected.
This credit shell shall be issued in the name of
the passenger who has booked the ticket.

a. The passenger shall be able to consume the
credit shell up to 31st March, 2021 on any
route of his choice. If the passenger wants
to buy a ticket of value more than the credit
shell, then he can use cash to top it up. If
he wants to buy a ticket of value less than
the credit shell, he/she can do so and the
balance amount of credit shell shall be
available to him/her.

b. There shall be an incentive mechanism to
compensate the passenger if there is a delay
in consuming the credit shell – from the date
of cancellation upto 30th June, 2020 the
value of 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 credit
shell shall be enhanced by 0.75% of the face
value per month, up to March 2021.

c. The credit shell shall be transferable. The
passenger can transfer the credit shell to
any person, and the airlines shall honour
such a transfer. The airlines shall devise a
mechanism to facilitate such a transfer.

d. By the end of March, 2021, the Airlines shall
refund cash to the holder of the credit shell.

4. Notwithstanding what is stated above, the
airlines shall refund the full amount in case of
travellers who have since expired to the

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W.P.(C)D.No.10966 of 2020 etc.

account of the passenger or to his
representative.

B. For domestic airlines when the ticket has been
booked through a travel agent (including OTA) by
the passenger with the airline.

1. If the tickets have been booked during the
lockdown period for travel within the lockdown
period, in all such cases full refund shall be
given by the airlines immediately (this is being
mandated vide MoCA’s OM dated 16 th April,
2020 as the airlines were not supposed to book
such tickets). This amount shall be passed on
immediately by the Agent to the passengers.

2. For all other cases, the airlines shall make all
endeavours to refund the collected amount
within 15 days. This amount shall be passed
on immediately by the Agent to the passengers.

3. If on account of financial distress, if the airlines
are not able to do so they shall provide a credit
shell equal to the amount of fare collected.
This credit shell shall be issued in the name of
the passenger who has booked the ticket. The
credit shell shall be transferred by the Agent to
the passengers (if booking is through an agent).

a. The passenger shall be able to consume the
credit shell up to 31st March, 2021 on any
route of his choice. If the passenger wants
to buy a ticket of value more than the credit
shell, then he can use cash to top it up. If
he wants to buy a ticket of value less than
the credit shell, he/she can do so and the
balance amount of credit shell shall be
available to him/her.

b. There shall be an incentive mechanism to
compensate the passenger if there is a delay
in consuming the credit shell – from the date
20
W.P.(C)D.No.10966 of 2020 etc.

of cancellation up to 30th June, 2020 the
value of 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 credit
shell shall be enhanced by 0.75% of the face
value per month, up to March 2021.

c. The credit shell shall be transferable. The
passenger can transfer the credit shell to
any person, and the airlines shall honour
such a transfer. The airlines shall devise a
mechanism to facilitate such a transfer.

d. By the end of March, 2021, the Airlines shall
refund cash to the holder of the credit shell.

e. The travel agents shall be entitled for their
usual fees/service charges/commission.

4. Notwithstanding what is stated above, the
airlines shall refund the full amount in case of
persons who have since expired. This amount
shall be passed on immediately by the Agent to
the passengers.

C. For international travel when the ticket has been
booked on an Indian carrier and the booking is
ex­India

1. If the tickets have been booked during the
lockdown period for travel within the lockdown
period, in all such cases full refund shall be
given by the airlines immediately (this is being
mandated vide MoCA’s OM dated 16 th April,
2020 as the airlines were not supposed to book
such tickets). This amount shall be passed on
immediately by the Agent to the passengers, as
the case may be.

21
W.P.(C)D.No.10966 of 2020 etc.

2. For all other cases, the airlines shall make all
endeavours to refund the collected amount
within 15 days. This amount shall be passed
on immediately by the Agent to the passengers,
as the case may be.

3. If on account of financial distress, if the airlines
are not able to do so they shall provide a credit
shell equal to the amount of fare collected.
This credit shell shall be issued in the name of
the passenger who has booked the ticket. The
credit shell shall be transferred by the Agent to
the passengers (if booking is through an agent).

a. The passenger shall be able to consume the
credit shell up to 31st March, 2021 on any
route of his choice. If the passenger wants
to buy a ticket of value more than the credit
shell, then he can use cash to top it up. If
he wants to buy a ticket of value less than
the credit shell, he/she can do so and the
balance amount of credit shell shall be
available to him/her.

b. There shall be an incentive mechanism to
compensate the passenger if there is a delay
in consuming the credit shell – from the date
of cancellation up to 30th June, 2020 the
value of 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 credit
shell shall be enhanced by 0.75% of the face
value per month, up to March 2021.

c. The credit shell shall be transferable. The
passenger can transfer the credit shell to
any person, and the airlines shall honour
such a transfer. The airlines shall devise a
mechanism to facilitate such a transfer.

22
W.P.(C)D.No.10966 of 2020 etc.

d. By the end of March, 2021, the Airlines shall
refund cash to the holder of the credit shell.

e. Notwithstanding what is stated above, the
airlines shall refund the full amount in case
of persons who have since expired. This
amount shall be passed on immediately by
the Agent to the passenger’s representative.

D. For international travel when the ticket has been
booked on a foreign carrier and the booking is ex­
India

1. If the tickets have been booked during the
lockdown period for travel within the lockdown
period, in all such cases full refund shall be
given by the airlines immediately (this is being
mandated vide MoCA’s OM dated 16 th April,
2020 as the airlines were not supposed to book
such tickets). This amount shall be passed on
immediately by the Agent to the passengers, as
the case may be.

2. For all other cases, the airlines shall refund the
collected amount to the passenger within 15
days. This amount shall be passed on
immediately by the Agent to the passengers. (If
the booking is through an agent).”

14. Further affidavit in the form of supplementary affidavit is

filed on behalf of respondent nos.1 and 2 which is more in the

nature of a clarificatory one on certain doubts expressed by the

learned counsel for the petitioners. While clarifying the category

of passengers who are proposed to be covered under the

proposed formulations mentioned in the earlier affidavit, it is

clarified that the following categories are covered:
23
W.P.(C)D.No.10966 of 2020 etc.

“(i) Passengers who had booked their tickets
directly from the domestic airline for domestic
travel;

(ii) Passengers who had booked their tickets
through a travel agent (including OTA) for
domestic airline for domestic travel;

(iii) International travel passengers who had
booked their ticket on an Indian carrier and
the booking is ex­India;

(iv) International travel passengers who had
booked their ticket on a foreign carrier and
the booking is ex­India.

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
which are originating from India.”

Further clarification is also made on period of booking of tickets.

It is stated that the formulations suggested will cover category of

cases where passengers who have booked the tickets prior to

lockdown for travel upto 24th May 2020 and refund of fares to

passengers covered under this category shall be governed by the

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

airline as the airlines were not supposed to book such tickets.

With regard to passengers who have booked tickets at any period

24
W.P.(C)D.No.10966 of 2020 etc.

of time but for travel after 24 th May 2020 it is stated that the

passengers covered under this category shall be governed by the

provisions of CAR. While clarifying the issue raised by the tour

operators with regard to credit shell, it is stated that in this

category there are two types of purchase of ticket by the agents.

The first mode is that when initially passengers pay the money to

agent and agent purchases ticket for the passenger and the

second mode is the one where agent purchases the ticket for the

passengers through its advance deposit with the airline and the

passengers pay the money either at the time of consumption of

ticket or may be even after consumption of ticket. In the affidavit

it is made clear that even in cases where tickets are purchased

by tour operator, who has paid the money to the airline for

purchasing the ticket for the client but the client is yet to pay

that money to the agent, then on cancellation of ticket and

converting it into a credit shell, the ticket will remain in the name

of passenger and in case passenger utilises the credit shell he

will have to pay to the agent and not to the airline. However, in

case the passenger does not utilise the credit shell till 31 st March

2021, then airline will have to refund the amount as per

proposed formulation and money will go back to the same

account of the agent from which the ticket amount was paid to

the airline. It is also clarified that in case passenger in whose

25
W.P.(C)D.No.10966 of 2020 etc.

name the ticket is booked does not utilise the credit shell till 31 st

March 2021, then the airline will have to refund with interest

prescribed in the formulation to the agent from whose account

the ticket was booked.

15. Referring to supplementary affidavit filed on behalf of

respondent nos.1 and 2 learned counsel appearing for the agents

have submitted that when the tickets are purchased by the agent

for the passenger by paying their money which is yet to be

received from the passenger, there should not be any difficulty

for giving the credit shell in the name of the agent himself who

has purchased the ticket. When it was pointed out that as per

the supplementary affidavit filed by the respondent nos.1 and 2 it

was made clear that in cases where tickets were purchased by

agents for passengers, where credit shell is given in the name of

passenger, if it is not utilised before 31 st March 2021 money will

be returned to the account of agent from whose account money

was paid to the airline, there should not be any difficulty in

issuing credit shell in the name of agent, the learned Solicitor

General obtained instructions in this regard and filed additional

affidavit on 24th September 2020 on behalf of respondent nos.1

and 2. In this affidavit, it is stated that the existing regulatory

mechanism recognises the contract between the passenger and

the airlines only, for a ticket which is purchased and for which a

26
W.P.(C)D.No.10966 of 2020 etc.

named passenger only can be accounted for in the ‘passenger

manifest’ of a schedule flight which is to be maintained as per

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,

the proposed formulation suggested earlier, only recognises the

contract between the airline and the passenger of a purchased

ticket. As such it is stated that credit shell is proposed to be

issued in the name of passengers only who have booked their

tickets through agents and it is not feasible to issue a credit shell

in the name of agent, as much as ticket was purchased in the

name of passenger but at the same time it is clearly stated that if

such voucher is not used before 31 st March 2021 as per the

formulation, money has to be paid back by the airliner through

the same account from which they have received money.

16. In view of such formulations which are arrived at during

the course of meetings held by the respondent nos.1 and 2 with

other stake holders, airlines etc., it is submitted that

substantially their grievances stand resolved but at the same

time certain issues were raised during the course of hearing.

17. Sri Sanjay Hegde, learned senior advocate appearing for the

Pravasi Legal Cell has submitted that in view of the proposals as

27
W.P.(C)D.No.10966 of 2020 etc.

mentioned in the affidavit filed by the respondent nos.1 and 2,

their grievances are substantially redressed but at the same time

he has submitted that for the bookings made for foreign air travel

through Indian carriers outside the country, same formulation as

proposed by the respondent nos.1 and 2 can be applied. Sri C.A.

Sundaram, learned senior counsel appearing for the Air

Passengers Association of India has submitted that whatever the

mode they have booked, all passengers are entitled for refund

immediately. It is submitted that the problems faced by the

airlines is no ground for not refunding the money which is paid

by the passengers. Sri Harshwardhan Bhende, learned counsel

appearing for the Travel Agents Federation of India has

submitted that when the tickets are booked by travel agents by

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

Association of Tour Operators has contended that, when tickets

are booked by agents, there is no reason for not issuing credit

shell in the name of agents. It is further submitted that in case

credit shell is not utilised by 31st of March 2021, refund has to

come back to the same account of the agent, from which account

money is paid for bookings.

28
W.P.(C)D.No.10966 of 2020 etc.

18. Shri Harish Salve, learned senior counsel appearing for

Spicejet Ltd., in view of the stand of respondent nos.1 and 2 in

their first affidavit, has stated that the formulations arrived at as

mentioned in the affidavit are by and large acceptable to his

client. Sri Rohtagi, learned senior counsel appearing for Indigo

Airlines, also has submitted that the suggestions/ formulations

as suggested in the affidavit filed on behalf of respondent nos.1

and 2 are acceptable. Shri Pinaki Misra, learned senior counsel

appearing for Tata SIA Airlines Ltd. (Vistara Airlines) and Air Asia

India Ltd. has submitted that the incentive mechanism suggested

for enhancing the face value of the credit shell, in the affidavit

filed by respondent nos.1 and 2 itself is reasonable and no higher

amount of interest may be considered on the refund. Sri Arvind

Datar, learned senior counsel appearing for Go Airlines India Ltd.

by drawing our attention to the detailed affidavit filed on its

behalf has submitted that COVID­19 is an existential threat to

commerce generally, and to airlines in particular. It is submitted

that in developed countries airline industry has been able to

secure itself more broad­based State relief (whether by bail­out or

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,

learned senior counsel has submitted that airlines is one of the

29
W.P.(C)D.No.10966 of 2020 etc.

worst affected sectors on account of pandemic COVID­19.

Learned counsel drew our attention to the Report dated 09 th June

2020, of IATA (the world­wide Aviation Industry Association) on

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

passenger demand it further states that GDP growth is likely to

contract by 5.0% in 2020; COVID­19 will have a significant

impact on international trade (a 13% decline); 2020 will be the

worst year in the history of airlines with net losses of $84.3

billion; and 32 million jobs supported by aviation are at risk etc.

Referring to the severe liquidity crunch faced by airlines it is

submitted that if the credit shells are not utilised by 31 st March

2021, it is not possible to refund the money as ordered and

learned counsel has requested to extend the time to encash

credit shell at least upto 31st March 2022 to balance the equities.

19. Though the various contentious issues are raised on both

sides and at the same time the suggestions/formulations as

suggested by respondent nos.1 and 2 in the affidavits filed before

this Court are by and large acceptable to the majority of stake

holders. In ordinary course modalities and timelines for refund

on cancellation of tickets are governed by, the Civil Aviation

Requirements, i.e. CAR dated 22nd May 2008; 06th August 2010

30
W.P.(C)D.No.10966 of 2020 etc.

as revised on 27th February 2019, and the said Requirements are

issued by the competent authority in exercise of powers under

the provisions of Aircrafts Act, 1934 and the Rules made

thereunder. But at the same time we cannot lose sight of the

present situation prevailing in the country and across the globe,

i.e. the effect of pandemic COVID­19. 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 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 stake holder. In view of

the suggestions and formulations arrived at in the meetings held

by respondent nos.1 and 2, which are acceptable to the majority

of stake holders, have to be implemented in letter and spirit. We

also feel that such formulations are workable solutions in these

peculiar circumstances which are prevailing in the country. The

grievances which are raised on behalf of agents can be taken care

by this Court by issuing appropriate directions wherever

31
W.P.(C)D.No.10966 of 2020 etc.

bookings are made by them, so as to see that their interest is

safeguarded. Sri Arvind Datar, learned senior counsel, though

has argued to extend the timelines for encashment of credit shell

at least up to 31st March 2022 or any other shorter period but we

are not inclined to accept the same, keeping in mind that the

passengers who, with the hope of travel, have booked their

tickets by spending their own money. For these reasons we are

not inclined to delve any further on any of the contentions and

deem it appropriate to dispose of this batch of cases with the

following directions:

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 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.

32

W.P.(C)D.No.10966 of 2020 etc.

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 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
33
W.P.(C)D.No.10966 of 2020 etc.

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 upto 30th June, 2020 in
which event the credit shell shall be enhanced by
34
W.P.(C)D.No.10966 of 2020 etc.

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.

Further, the second respondent­Directorate, shall ensure strict

compliance of the directions referred above, by issuing necessary

instructions to the all concerned.

20. With the above directions, these writ petitions are disposed

of.

………….…………………………………J.

[ASHOK BHUSHAN]

….…………………………………………J.

[R. SUBHASH REDDY]

….…………………………………………J.

[M.R. SHAH]

New Delhi.

October 01, 2020.

35



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