Case Study 05: Why Liability Insurances are vital for every Tour Operator.
Case Note:
Online Travel Portal vs. Amrit Pal Jaiswal & Ors. on 07 August, 2024
Revision Petition No. 2544 of 2023
Facts of the Case
- Complaint filed by Amrit Pal Jaiswal and others against an online travel portal regarding the non-refund of flight tickets booked for travel on Jet Airways, which later ceased operations. The complainants had booked flight tickets from New Delhi to Edmonton and back via the online travel portal, paying a total of INR 1,83,140.
- After Jet Airways shut down operations, the complainants sought a refund but received no satisfactory response from the online travel portal, leading the complainants to approach the District Consumer Disputes Redressal Commission, Moga.
The District Commission ruled partially in favor of the complainants on 7 June 2022, directing online travel portal to process the refund.
Dissatisfied with the decision, the online travel portal appealed to the Punjab State Consumer Disputes Redressal Commission, which dismissed their appeal on 17 August 2023. Consequently, they filed a Revision Petition (RP No. 2544 of 2023) before the National Consumer Disputes Redressal Commission (NCDRC).
Petitioner’s Arguments (Online Travel Portal)
- Not Liable for Refund – The online travel portal contended that it is merely an intermediary between customers and airlines, and are not responsible for refunds when an airline defaults.
- Insolvency of Jet Airways – The company argued that refund claims should be pursued through the National Company Law Tribunal (NCLT) insolvency proceedings against Jet Airways.
- Non-Joinder of Necessary Party – The online travel portal claimed that Jet Airways was a necessary party to the case but was not included by the complainant.
- Legal Protection as an Intermediary – Citing Section 79 of the Information Technology Act, 2002, the online travel portal argued that as an intermediary, it could not be held responsible for third-party actions.
- Previous Precedents – The petitioner relied on previous judgments, including Bharathi Knitting Co. v. DHL Worldwide Express (1996) and Ajay Travels v. Pulak Jain (2015), to support their stand.
- Terms and Conditions of Booking – The online travel portal pointed out that it’s User Agreement stated that the airline, not the online travel portal, was responsible for refunds in case of non-operations of the carrier.
Respondents’ Arguments (Complainants)
- Direct Transaction with Online Portal – The complainants argued that the online travel portal was responsible for refunds since the tickets were booked through its platform, and Jet Airways was not directly involved in the booking process.
- Online Travel Portal’s Own Refund Guidelines – They pointed out that the online travel portal’s policy itself stated that customers must contact the online travel portal for refunds, and not the airline.
- Failure to Prove Fund Transfer – The online travel portal failed to produce evidence showing that the complainants’ money was transferred to Jet Airways, making its claim that Jet Airways was responsible for the refund questionable.
- Precedents Supporting Consumer Rights – The respondents cited Supreme Court rulings, including Ruby (Chandra) Dutta v. United India Insurance Co. Ltd. (2011) 11 SCC 269, which emphasized consumer protection in similar disputes.
NCDRC’s Findings and Decision
- Online Travel Portal’s Own Refund Policy Holds It Liable – The Court referred to the online travel portal ’s own refund guidelines, which clearly stated that refunds must be sought from the online travel portal itself, not the airline.
- Jet Airways Not a Necessary Party – The State Commission had rightly rejected the argument that Jet Airways should have been included in the case, as the complainants had no direct dealings with the airline.
- Online Portal Acted as a Commission Agent – The Court highlighted that the online travel portal charged commission on ticket bookings, meaning it was more than just a facilitator and had financial involvement in the transaction.
- Lack of Evidence Supporting Online Portal ’s Defense – The company failed to provide any documentary proof that it had transferred the complainants’ ticket payments to Jet Airways.
- Consumer Protection Over Technical Defenses – The Court ruled that intermediaries can not escape liability simply by citing their role as a booking platform, especially when they advertise handling of refunds.
The National Consumer Disputes Redressal Commission (NCDRC) dismissed the online travel portal ’s Revision Petition and upheld the decisions of the State Commission and District Commission, affirming the online travel portal’s liability for refund to the complainant.
Conclusion
This judgment reinforces consumer rights in cases of online bookings and establishes clear accountability for intermediaries like online travel portal’s, ensuring that they cannot evade liability when service-providers fail to deliver.
While insurance would add to operational costs, it reduces legal risks, improves customer confidence, and prevents financial losses from service-provider failures. It may be a necessary investment as Courts continue strengthening consumer protection laws.
In an era where travel intermediaries are increasingly held accountable for service-provider failures, having insurance is no longer an option, but a strategic necessity. As seen in the recent judgement, Courts are reinforcing consumer rights, making platforms responsible for refunds even when airlines default. Professional Indemnity coverage can shield intermediaries from financial risks, legal disputes, and reputational damage. By proactively securing such safeguards, companies can enhance customer trust, ensure business continuity, and comply with evolving consumer protection laws, ultimately securing their long-term sustainability in thtravel industry.
Contact
Mr. Akarshit Sonkar – M: +91 9582743333 or E: akarshit@safetree.in
Ms. Gunjan Hans – M: +91 9899044229 or E: gunjan.hans@safetree.in