Despite Suspending Operations & Declaring Insolvency, Go First Airline Continued Booking Tickets: Kerala HC Issues Notice To DGCA

The Kerala High Court on Friday issued a notice to the Directorate General of Civil Aviation (DGCA) in a Writ Petition filed alleging that Go First Airlines suspended their operations by declaring voluntary insolvency and yet allowed their ticket booking platforms to book flights, resulting in daylight robbery and passengers losing their hard-earned money.

The single judge bench of Justice Mohammed Nias C.P. directed the DGCA to pass appropriate orders regarding the shutting down of the ticket booking portals of Go First Airlines. The High Court while issuing notice asked the DGCA in its interim order to take appropriate measures regarding the grievance. 

The Petitioner-in-person, Advocate Yeshwanth Shenoy submitted that Go First Airlines declared voluntary insolvency by approaching the National Company Law Tribunal and cancelled all their flights for 3rd, 4th, and 5th May 2023 and that yet the company being aware of its intent to suspend operations, allowed the booking platform to be live and induced passengers to book their flights. 

Shenoy submits that the people have lost their hard-earned money to the Airline company as there will be no operations carried by Go First and that by further allowing the Airline company to keep its booking portals open, many people are falling prey to daylight robbery. The Petition states that the DGCA allowed the company to keep its booking portals open and failed to perform its obligations. 

"DGCA is the Air Regulator who is entrusted with regulations of Airline Companies and the DGCA ought to have conducted regular financial audits and the DGCA failed in doings its duty" reads the petition. It further states that "the Airline Companies are allowed to take booking for up to a year in advance and because of the DGCA not performing its duties, several passengers lost their hard-earned money and will end up spending more on booking their flights", the petition says.

The Petitioner states that he has reason to believe that no such financial Audits were conducted by the DGCA on the Airline Company and even if any were conducted, the same would have been a ‘cosmetic audit’ just for the purposes of legal requirement and not a real or an actual audit. The Petitioner further adds that the DGCA is duty-bound to conduct financial Audits of Airline companies in accordance with 'CAR Section 3 – Air Transport Series ‘S’ Part I, Issue I dated 5 July 2010'.

The Petitioner has further submitted that the DGCA should restrict the scheduled airline from collecting money in advance if the financial health of the company is not assured and that on May 2, 2023, the DGCA just issued a show cause notice and did not take any deterrent measures against the Airline company.

The Petitions also highlight that to declare insolvency, a company has to take the approval of shareholders and the Board of Directors which is a time taking process and that despite being aware of the company's intention all this time, the directors continued to allow flight bookings on its portal which is a criminal offence punishable under the Indian Penal Code.

Continuing, Shenoy submitted that even if a refund of tickets is made, it will still cause people to end up spending more money in booking their flights as the cost of tickets will go up the moment news of insolvency by the Airline comes out. 

The plea seeks the following reliefs: (i) direct Respondent No.2 to strictly comply with the conduct of financial audits in accordance with Ex-P4 CAR (Civil Aviation Requirement) and to recommend measures to ensure potential passengers are protected from non-refund of monies on tickets booked on cancelled flights. (ii) To direct Respondent No.3 to refund the amounts charged to the passengers for flights booked after the Board of Directors decided to file for voluntary Insolvency as all collection of monies were made by fraudulent means of keeping the flight booking portals open. (iii) To direct Respondent No.3 to initiate disciplinary actions against their employees who failed to conduct Financial Audits in accordance with the CAR and for having failed to take remedial measures after such financial audits. 

Cause Title: Yeshwanth Shenoy V. Union Of India And Others [WP(C) 15269/2023]