Saket Court, Delhi: In a civil suit filed against Akasa Air for unilaterally cancelling group flight bookings made by a travel agency, the Single Judge Bench of Lalit Kumar, J., decreed the suit in favour of the plaintiff for over Rs. 1,08 crores holding that Akasa Air had breached the contract.
Background
The plaintiff was a travel agency, whereas the defendant was Akasa Air, an airline company, which entered into an agreement allowing the plaintiff to purchase tickets in bulk for air travel through Akasa Air.
The plaintiff bought 8 groups of tickets consisting of 80 seats each, totalling 640 tickets for flights scheduled on various dates in the Christmas-New Year festive season for Delhi-Goa and Goa-Delhi. The plaintiff claimed that they paid around Rs. 4.82 lakhs as the 25 per cent advance payment, and the remaining 75 per cent was to be paid 21 days before the flights as per their agreement.
However, months before the scheduled flights, Akasa Air cancelled the entire booking without any prior intimation and refunded the money, which allegedly caused huge losses to the plaintiff. Aggrieved, the plaintiff approached Akasa Air, which offered to reduce the seats by half on new prices, which was unacceptable to the plaintiff.
Hence, the present suit.
Issues and Analysis
1. Whether the plaintiff is entitled to the damages to the tune of Rs. 1.08 crores as loss of profits, on account of the cancellation of tickets by Akasa Air?
The Court noted that the plaintiff had proved that it was a registered travel agent of Akasa Air, and the evidence on record established that they booked the aforementioned seats. Admittedly, 25 per cent of the total booking amount, i.e., Rs. 4.82 lakhs, was paid by the plaintiff through Akasa Air’s agency wallet, and the Passenger Name Record (PNR) was generated. Thus, the Court held that the generation of PNRs upon receipt of part consideration constituted acceptance of the offer and completion of a binding commercial contract within the meaning of Sections 2(a), 2(b), 2(d), and 10, Contract Act, 1872 (the Act). Akasa Air did not dispute receipt of the said amount or the generation of the PNRs.
Regarding the claim that 50 per cent of the fare was required to be paid in advance for group bookings exceeding 70 passengers, the Court noted that Akasa Air failed to provide any contemporaneous document to demonstrate that such a stipulation was in force and applicable at the time the bookings were made. Furthermore, the terms and conditions attached in subsequent communication with the plaintiff were admittedly issued after the cancellation. If 50 per cent advance payment were mandatory, the system would not have generated the PNRs upon payment of 25 per cent. Akasa Air also did not send any notice demanding the balance 25 per cent before the cancellation, and neither was the advance amount forfeited in terms of the alleged 50 per cent advance payment clause.
Thus, in the absence of proof of such contractual stipulation, and in view of Sections 91 and 92, Sakshya Adhiniyam, 2023 (BSA), the Court rejected the plea of non-payment of 50 per cent advance.
As far as the cancellation was concerned, the Court noted that Akasa Air claimed that the plaintiff could have cancelled the booking using their PNR credentials, but produced no evidence in this regard. No certificate in terms of Section 63 BSA was filed by Akasa Air in support of such plea. In these circumstances, the Court stated that an adverse inference under Section 114 Illustration (g) BSA was liable to be drawn against Akasa Air for withholding the best evidence in its possession. Accordingly, the Court held that the cancellation was attributable to Akasa Air.
The Court further held that by unilaterally cancelling the PNRs before the scheduled departure without notice or lawful justification, Akasa Air committed breach of contract under Sections 37 and 39 of the Act.
Regarding the extent of loss of profits, the Court noted that the travel period in question covered the Christmas and New Year season, which was judicially noticeable as a peak travel period. The screenshots of prevailing fares shown by the plaintiff reflected prices as Rs 17,000 or higher as the departure date approached, much higher than the plaintiff’s purchase price of Rs 3,000.
Noting that the plaintiff’s claim was computed based on Rs. 17,000 per seat for 640 seats, amounting to Rs. 1,08,80,000, the Court stated that the computation was founded upon documentary evidence and admitted market practice and price, which were prevalent for the same flights, same date, and same route. The law does not require mathematical precision in assessing damages for loss of profit. In this regard, the Court referred to A.T. Brij Paul Singh v. State of Gujarat, (1984) 4 SCC 59, the Supreme Court held that where performance of a contract is wrongfully prevented, loss of expected profit is recoverable and need not be proved with exactitude. In J.G. Engineers (P) Ltd. v. Union of India, (2011) 5 SCC 758, the Supreme Court reiterated that when a party is prevented from performing a contract, it is entitled to claim profit which it would have earned.
The Court also rejected the contention that the plaintiff did not sell any ticket before the cancellation, noting that the cancellation occurred several months before the travel dates. The opportunity to sell the tickets during the peak season stood extinguished by the defendant’s unilateral act. The law does not mandate proof of concluded onward contracts in order to claim loss of profit.
Regarding the plea of mitigation, the Court held that the same was without merit as the alternative offer made by Akasa Air materially altered the original contract in terms of seat quantity and pricing. The plaintiff was not bound to accept an inferior or commercially altered offer to mitigate loss. Mitigation does not require acceptance of substituted contractual terms.
Furthermore, the Court held that the refund of the advance amount did not absolve Akasa Air of liability for breach. Restitution of advance consideration does not extinguish the statutory right to damages under Section 73 of the Act.
Thus, the Court held that the plaintiff had established, on a preponderance of probabilities as required under civil jurisprudence and the Commercial Courts Act, 2015 (CC Act), that Akasa Air’s wrongful cancellation deprived the plaintiff of a real and foreseeable commercial opportunity to earn profit during the peak festive season, and that the quantum claimed was supported by documentary evidence and reasonable commercial assessment.
2. Is the plaintiff entitled to interest @ 18 per cent per annum on the damages?
At the outset, the Court noted that the plaintiff had not provided any contractual stipulation between the parties providing for payment of interest at the rate of 18 per cent per annum. The documents exhibited by the plaintiff did not contain any clause entitling them to interest at the claimed rate, and there was no evidence of any trade usage or mercantile custom to substantiate the said rate.
Upon perusal of Section 34. Civil Procedure Code, 1908 (CPC), the Court noted that in the present case, neither any contractual rate nor any evidence of a prevailing commercial lending rate was proved. Further, interest is ordinarily awarded either on a liquidated sum or on a sum wrongfully withheld. In the present matter, the advance amount was admittedly refunded. Therefore, there was no subsisting principal amount retained by Akasa Air on which interest could be claimed as of right. Thus, the damages claimed were unliquidated and contested. In such circumstances, the Court held that a claim for interest at the rate of 18 per cent per annum could not be sustained as a matter of right.
Thus, the Court held that the plaintiff failed to prove its entitlement to interest @ 18 per cent per annum on the claimed damages.
3. Is the plaintiff entitled to damages on account of mental agony and harassment, as prayed for?
The Court stated that compensation for mental agony is ordinarily granted in cases involving personal injury, consumer disputes affecting individual rights, or tortious conduct causing harassment. In purely commercial transactions between business entities, Courts have consistently exercised restraint in awarding non-pecuniary damages unless there is cogent and independent evidence of harassment beyond the ordinary incidents of commercial breach.
Stating this, the Court noted that the present dispute arose out of a commercial transaction between a travel agency and an airline. The plaintiff did not lead any independent evidence to substantiate mental agony or harassment apart from their own oral assertion. No material was placed on record to demonstrate public humiliation, defamation, coercion, or any conduct amounting to an independent tort. Thus, the claim for mental agony was neither separately quantified nor supported by documentary or medical evidence. Accordingly, the Court held that mere assertion in affidavit evidence, without corroboration, does not discharge the burden under Section 101 BSA.
The Court further stated that even if the cancellation was unjustified, the remedy in a commercial contract lies in pecuniary compensation for proved financial loss and not in award of damages for mental distress, unless exceptional circumstances are demonstrated. Such exceptional circumstances were conspicuously absent in the present case.
Accordingly, the Court held that the plaintiff failed to establish, by cogent and reliable evidence, that they were entitled to damages on account of mental agony and harassment arising out of the subject commercial transaction.
4. Is the cancellation of the PNR in line with the agreement between the parties?
At the outset, the Court noted that the subject commercial transaction was a concluded contract within the meaning of Sections 2(h) and 10 of the Act.
Regarding the requirement for 50 per cent advance payment, the Court reiterated that Akasa Air failed to produce any contemporaneous document to establish that such a condition was part of the contractual framework at the time of booking. No system log, digital acceptance record, server extract, or contemporaneous terms governing the booking have been placed on record to substantiate the plea of mandatory 50 per cent advance. The Court also reiterated the lack of a notice seeking a balance 25 per cent amount by Akasa Air and the cancellation happening months before the flights.
“Even assuming arguendo that 50 per cent advance was required, elementary principles of contractual fairness and commercial prudence required Akasa Air to call upon the plaintiff to cure the alleged default before resorting to cancellation.”
Furthermore, the Court noted that instead of invoking any forfeiture clause, Akasa Air refunded the entire advance amount. Such conduct was inconsistent with the plea that cancellation was affected strictly under a binding forfeiture provision. If the plaintiff had indeed committed a contractual breach justifying cancellation, Akasa Air would have acted in accordance with the alleged clause permitting forfeiture rather than refund.
The Court remarked that the generation of PNRs upon acceptance of 25 per cent advance, issuance of tax invoices, and absence of any contemporaneous objection by Akasa Air demonstrated that the contractual arrangement proceeded based on the 25%-75% payment structure as asserted by the plaintiff. “Akasa Air’s subsequent reliance upon an unproven 50 per cent condition appears to be an afterthought.”
Accordingly, the Court decided this issue against Akasa Air.
5. Does the Court have territorial jurisdiction to try and entertain the present suit?
The Court noted that the plaintiff’s office was located in Kalkaji, Delhi, all the transactions and communications took place from the Delhi office, and the pre-institution mediation under Section 12-A, CC Act was conducted at Saket Courts, Delhi. Furthermore, the documentary evidence supported these claims of the plaintiff. On the other hand, the Court noted that Akasa Air had not produced any document to establish that the parties agreed to confer exclusive jurisdiction on any Court outside Delhi, and no jurisdiction ouster clause was proved in accordance with the law.
Upon perusal of the facts, the Court remarked that a substantial part of the cause of action arose in Delhi, and in the absence of a valid and proved exclusive jurisdiction clause, the general provisions of Section 20 CPC would govern the case.
Accordingly, the Court held that a substantial and material part of the cause of action arose within the territorial jurisdiction of this Court.
6. Did the plaintiff comply with Section 12-A of the CC Act?
At the outset, the Court noted that since the present suit was for recovery of damages and did not contemplate any urgent interim relief, compliance with Section 12-A was mandatory. The Court further noted that pre-institution mediation was conducted before the Delhi Legal Services Authority (DLSA), Saket, but it failed. Furthermore, there was no material on record to show that the mediation was not in accordance with the law or that the failure report was defective.
Thus, the Court held that the contention raised by Akasa Air regarding the delay between the date of mediation failure and filing of the present suit was legally untenable as Section 12-A merely requires exhaustion of the remedy of pre-institution mediation prior to institution of the suit.
“The statute does not prescribe any limitation period within which the suit must be filed after failure of mediation. The requirement is one of prior compliance, not immediate institution.”
Thus, the Court held that the mandatory requirement under Section 12-A, CC Act was fully complied with.
7. Whether no cause of action is accrued to the plaintiff for filing the present suit, as the advance amount was refunded?
The Court reiterated that “cause of action” comprises a bundle of material facts which are required to be proved for obtaining a decree. While determining the existence of a cause of action, the plaint must be read as a whole, and the defence taken in the written statement is immaterial for such determination.
The Court noted that in the present case, the existence of a commercial transaction, payment of advance consideration, and subsequent cancellation were not in dispute. Whether such cancellation was justified or whether damages are ultimately payable are matters of the merits and quantum. However, the existence of a dispute arising out of the cancellation of seats after receipt of consideration unmistakably constituted a bundle of material facts giving rise to a civil right to sue.
The Court stated that under Section 10 and Section 73 of the Act, where breach of contract is alleged, a corresponding right to seek compensation accrues. Under Section 101 BSA, the burden to establish the absence of a cause of action lay upon the defendant, which was not discharged. The Court further stated that the refund of the advance amount did not extinguish the plaintiff’s claim for damages, if otherwise maintainable. The question of whether damages are speculative or mitigated cannot negate the accrual of a cause of action.
Accordingly, the Court held that the plaint disclosed clear and specific material facts constituting a cause of action, and the same were substantiated by documentary and oral evidence.
8. Whether the plaintiff is estopped from claiming damages on account of the principle of mitigation and damages?
Regarding the mitigation attempt, the Court noted that the said alternative offer offered 8 PNRs with only 40 seats per PNR at approximately Rs. 9000 per seat, subject to fresh terms and conditions, whereas the original booking was for 80 seats per PNR with seats priced at Rs. 3000 each. Thus, the Court held that the so-called alternative offer was not a restoration of the earlier booking but a fresh commercial proposal, altering both seat capacity and fare structure.
The Court stated that Section 73 of the Act contemplates compensation for loss arising naturally from breach. The Explanation embodies the principle that the aggrieved party must take reasonable steps to mitigate loss. However, it is equally settled that the burden to prove failure to mitigate lies upon the party raising such a defence. In this regard, the Court referred to A.T. Brij Paul Singh (supra), wherein the Supreme Court held that once a breach is established, loss of profit flowing naturally therefrom is recoverable, and precise mathematical proof is not indispensable. Further, in J.G. Engineers (supra), the Supreme Court held that an aggrieved party is not bound to accept a fundamentally altered or disadvantageous substitute contract.
Thus, the Court held that mitigation does not compel the injured party to accept a materially altered commercial arrangement or to enter into speculative substitute transactions to protect the party in breach.
The Court also noted that Akasa Air failed to produce any cogent evidence to demonstrate that the mitigation offer was commercially equivalent to the original contract, that identical or substantially similar inventory was available in the market, enabling the plaintiff to secure 640 seats on comparable commercial terms. Furthermore, the refund was processed nearly three months after cancellation and after the issuance of a legal notice.
Noting this, the Court stated that the mere fact that the plaintiff did not accept the fresh proposal or did not utilise the refunded amount for alternative bookings does not, ipso facto, establish failure to mitigate. Restitution of advance payment does not extinguish the right to claim consequential damages arising from breach.
Thus, in the absence of proof that reasonable and commercially viable alternatives were available, the Court held that the defence of mitigation could not be sustained.
9. Whether the claim of the plaintiff for damages is based on speculation and not substantiated by any concrete ground?
At the outset, the Court referred to Section 73 of the Act, which provides that when a contract is broken, the party who suffers by such breach is entitled to receive compensation for any loss which naturally arose in the usual course of things from such breach. It is settled law that loss of profit is a permissible head of damages provided there is reasonable certainty of its occurrence.
In this regard, the court referred to A.T. Brij Paul Singh (supra), J.G. Engineers (supra), and MSK Projects (I) (JV) Ltd. v. State of Rajasthan, (2011) 10 SCC 573, wherein it was held that damages need not be proved with mathematical precision and a reasonable estimate based on material on record is permissible.
In the present case, the Court noted that the plaintiff proved that during the festive season, the fares on the same sector were being displayed at approximately Rs. 17,000/- per ticket and at times even higher. Akasa Air did not place any contemporaneous fare data to rebut the said assertion. Thus, mere suggestion in cross-examination that airfares are dynamic or speculative was insufficient to discharge the burden cast upon Akasa Air under Sections 101 – 103 of the BSA.
The Court further stated that the contention that the plaintiff did not sell any ticket was also not determinative. The loss claimed was the loss of opportunity arising from the cancellation of a confirmed group inventory during peak season. Akasa Air itself offered fresh PNRs at Rs. 9,000 per seat, thereby implicitly acknowledging the commercial viability of the sector and the period in question.
“In commercial transactions, especially in the travel industry, group bookings for festive periods are made precisely to capitalize on predictable seasonal demand.”
Thus, the Court held that the refund of principal did not extinguish the claim for consequential damages flowing from breach. Section 73 of the Contract Act permits compensation in addition to restitution. The refund merely neutralized the advance; it did not compensate for the lost commercial advantage.
The Court added that Akasa Air failed to lead cogent evidence to show that the claimed rate of Rs. 17,000 per seat was unrealistic or improbable. No expert evidence, no system logs, and no backend records were produced to demonstrate otherwise. Thus, an adverse inference was liable to be drawn against Akasa Air for withholding the best evidence within its possession.
Accordingly, the Court held that the plaintiff’s claim was founded upon contemporaneous fare data, industry practice, and a calculable differential between booking cost and prevailing market rate. The quantification may be subject to scrutiny under Issue1; however, it could not be said that the claim per se was speculative or devoid of a concrete foundation.
Decision
Conclusively, the Court decreed the suit in favour of the plaintiff for Rs. 1,08,80,000.
[ABS Tour & Travels v. SNV Aviation Pvt Ltd., CS (COMM) 322/24, decided on 24-02-2026]
Advocates who appeared in this case:
For the plaintiff: Abhinay Sharma, Atul Sharma, Deeksha Prakash and Sakshi Tripathi
For the defendant: Gaurav Gupta, Shouryendu Ray, Yashendra Singhwal and Istela Jameel