Are NCLT Notices to Go First Lenders and IBBI Linked to Ticket Refunds?

In a significant development, the National Company Law Tribunal (NCLT) has issued notices to Go First’s Committee of Creditors (CoC) and the Insolvency and Bankruptcy Board of India (IBBI) regarding the issue of ticket refunds. The resolution professional (RP) of the beleaguered airline approached the court seeking a refund of ₹597.5 crore for tickets booked by the airline. The matter has sparked debate over the rightful ownership of the funds and has raised questions about the transparency of the resolution plan.

The RP’s submission to the NCLT revealed that aggregators, facilitating bookings, had made a substantial 97% of the bookings through placing security deposits in escrow accounts. These deposits amounted to a significant ₹550 crore. The RP argued that this money did not belong to the corporate debtor, Go First.

Responding to the plea, the Bench raised concerns about the lack of clarity in the resolution plan regarding the approval of the CoC for refunding the said amount. The Bench urged the council to work towards obtaining a specific resolution on this matter. The NCLT has directed both the IBBI and the CoC to file their responses in the case.

National Company Law Tribunal (NCLT)

The National Company Law Tribunal (NCLT) has listed the case for further hearing on August 7, 2023. The Directorate General of Civil Aviation (DGCA) had previously inquired about the refund process for passengers affected by Go First’s grounding, which occurred on May 3, 2023. Subsequently, on May 8, authorities issued Go First a show cause notice, prohibiting the airline from selling tickets directly or indirectly until they resolve the matter.

The current situation has led to uncertainty and concern among passengers who have booked tickets with the airline. With Go First grounded for several months, travelers have been awaiting clarity on the refund process for their bookings. The issue now lies in determining the rightful ownership of the escrow account funds, with the RP arguing that it should be returned to the affected passengers.

The NCLT’s involvement in the matter aims to address the legal complexities surrounding Go First’s insolvency and the ensuing refund obligations. This case could set a precedent for how such situations are handled in the future, ensuring better protection for consumers and also establishing a clear framework for airlines undergoing insolvency.

In conclusion, the NCLT’s issuance of notices to Go First’s CoC and the IBBI marks a crucial step towards resolving the contentious issue of ticket refunds. The court’s decision could significantly impact both the airline industry and passenger rights in India. All stakeholders involved will now be eagerly awaiting the August 7 hearing to gain clarity on the way forward. Until then, authorities and stakeholders aim to address the concerns of passengers and work towards reaching an equitable resolution.

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