Once Insolvency Proceedings Are Initiated, NCLT Would Adjudicate On Consumer Claims; Punjab State Commission Dismisses Appeal Against Jet Airways

Brief Facts:

Ramesh Bajaj (“Complainant”) booked two air tickets with Jet Airways (“Airline”) from Make My Trip for his visit to Calcutta from Chandigarh. While coming back, there was a stop at Pune. On reaching Pune, the Complainant's flight was cancelled. Moreover, he was intimated that there was no alternative flight which could take him to Chandigarh. The Complainant contacted the Airline and the Airport Authorities. However, no resolution was provided. As a result, the Complainant had to incur extra expenses to book the return ticket. Feeling aggrieved, the Complainant filed a consumer complaint against Make My Trip and the Airline in the District Consumer Disputes Redressal Commission, Ferozepur, Punjab (“District Commission”).

Make My Trip contended that it acted merely as a facilitator on behalf of the Complainant. Further, it had no control over the cancellation of the flight. The Airline did not appear before the District Commission. The District Commission ordered against Make My Trip and the Airline and directed them to pay Rs. 25,000/- as compensation and Rs. 3,000/- as litigation costs to the Complainant. Dissatisfied with the order of the District Commission, Make My Trip filed an appeal to the State Consumer Disputes Redressal Commission, Punjab (“State Commission”).

The Airline submitted that it was not liable since the Complainant accepted the terms and conditions along with the cancellation policy. Further, since the airline had ongoing insolvency proceedings against it, the appropriate claim had to be raised before the Interim Resolution Professional/Resolution Professional.

Observations of the Commission:

The State Commission perused the document issued by the Director General of Civil Aviation regarding the cancellation and delay of flights. It provided that in case of extraordinary circumstances, no compensation was required to be paid to the affected passenger. The State Commission elaborated by giving examples such as political instability, natural disasters, civil war, explosions, etc.

The State Commission observed that the Airline was declared bankrupt by the National Company Law Tribunal (NCLT) under specific sections of the Insolvency and Bankruptcy Code. This declaration meant that the circumstances leading to the cancellation of air tickets were beyond the control of the airline. In the resolution plan, it was clarified that operational creditors, including ticket holders, could choose between a cash refund or credit for future tickets, but not both. The State Commission found that the District Commission had not considered these crucial points in its order. Consequently, the appeal was allowed, overturning the District Commission's order. Further, the terms and conditions put forth by the User Agreement of Make My Trip had also not been taken into consideration.

As a result, the appeal was allowed, and the order of the District Commission was set aside. It was held that the decision of the NCLT would be final and binding upon the Complainant.