In ABS Tour & Travels v. SNV Aviation Pvt. Ltd., the Hon’ble Commercial Court at Saket, New Delhi decreed a commercial suit directing the defendant airline operating under the brand name Akasa Air to pay ₹1,08,80,000 towards loss of profits arising out of cancellation of confirmed group bookings.
The suit was instituted on 26.04.2024 seeking recovery of ₹1,08,80,000 along with pendent lite interest on account of cancellation of eight group Passenger Name Records comprising 640 seats for travel between Delhi to Goa and Goa to Delhi for the period from 23.12.2023 to 13.01.2024.
The plaintiff is a travel agency engaged in the business of tours and travels including booking of airline tickets and ancillary services. The business of the plaintiff involves purchasing air tickets in bulk and supplying the same to brokers, corporate clients and end customers.
The defendant is an airline company incorporated in India and operating under the brand name Akasa Air. The plaintiff had registered itself as an authorised agent on the defendant’s portal and was provided with login credentials and an organisation code enabling it to generate Passenger Name Records through the defendant’s agent portal.
As per the procedure prescribed by the defendant, payment of 25% of the total booking amount was required as advance consideration for generation of PNRs and the remaining amount was required to be paid prior to the scheduled departure of the flights.
Pursuant to the said arrangement, the plaintiff booked eight group PNRs comprising 640 seats for travel during the Christmas and New Year season and paid the advance amount required for confirmation of the bookings.
Subsequently, the defendant cancelled the said group bookings. The plaintiff contended that once the advance consideration had been accepted and the PNRs had been generated, a binding contractual relationship had come into existence and cancellation of the bookings resulted in loss of profits.
The Hon’ble Commercial Court examined the dispute in the context of Section 73 of the Indian Contract Act, 1872 governing damages for breach of contract. The Hon’ble Court observed that where performance of a contract is wrongfully prevented, the aggrieved party is entitled to compensation for loss of profits which naturally arises in the usual course of business.
The Hon’ble Court found that the defendant had accepted the advance payment and generated the PNRs and that no material had been placed on record to demonstrate that additional conditions regarding advance payment were communicated to the plaintiff.
Accordingly, the Hon’ble Commercial Court held that the cancellation of the bookings deprived the plaintiff of a foreseeable commercial opportunity to earn profits and decreed the suit directing payment of ₹1,08,80,000 towards loss of profits. The claim for damages towards mental agony was declined observing that the dispute arose out of a commercial transaction between business entities.
The judgment reiterates that where advance consideration is accepted and bookings are confirmed, unilateral cancellation resulting in foreseeable commercial loss may attract liability for damages under Section 73 of the Indian Contract Act, 1872.
