Flight Ticket Refund Dispute Not a Commercial Case: Delhi High Court Clarifies Scope of Commercial Courts Act

“A contract of carriage for personal air travel, even if paid in business class and taxed under GST, does not by itself constitute a commercial transaction — the element of trade or commerce must be inherently present.” - In a significant interpretation of the Commercial Courts Act, 2015, the Delhi High Court dismissed FAO (COMM), holding that a refund dispute stemming from the cancellation of airline tickets cannot be entertained by a Commercial Court as it does not constitute a "commercial dispute" under Section 2(1)(c) of the Act.

The Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela affirmed the Commercial Court’s order dated 14.11.2024, which had returned the plaint under Order VII Rule 10 CPC, allowing the plaintiffs to file it before a regular civil court. The Court held that the mere booking of air tickets for personal travel, and the resultant request for refund, does not qualify as a transaction involving trade, commerce, or business as required under the statute.

“Not Every High-Value Claim Becomes Commercial — There Must Be a Mercantile Element”

“A suit of high valuation minus elements of commerce or trade cannot be instituted under the Commercial Courts Act.”

The Appellants, Chand Mehra and his wife, had filed a commercial suit seeking a refund of ₹5,09,918 from British Airways PLC, along with interest and punitive damages, following cancellation of their New York-bound tickets due to a family medical emergency. The airline allegedly retained a major portion of the fare as cancellation charges and converted the balance into a Future Travel Voucher (FTV) without the appellants' consent.

While the appellants argued that the case involved a “contract of carriage” and therefore fell under Section 2(1)(c)(xviii) of the Commercial Courts Act (which includes “agreements for provision of services”), the High Court firmly rejected this interpretation:

“An agreement containing a provision for providing mere services on payment of certain charges cannot, in every case, be termed to be an agreement, dispute in respect of which can be said to be a commercial dispute.”

The Court reiterated that for any service-related dispute to fall under the Commercial Courts Act, it must involve an element of commerce, trade, business or financing, and not merely arise out of consumer dealings.

“GST Registration or Carriage Contract Doesn’t Add Commercial Flavour to Consumer Disputes”

“Just because the respondent is registered under GST or files returns for air travel services does not mean every dispute involving it becomes a commercial dispute.”

The appellants relied heavily on the fact that:

• The tickets were business class,

• British Airways is GST registered, and

• The transaction included payment of taxes.

They further invoked Section 3 of the Carriage by Air Act, 1972, and referenced the airline’s own terms of service admitting to a “contract of carriage”, which, they claimed, created a “commercial relationship”.

However, the Court held: “Merely because a contract comes into existence between a consumer and service provider upon booking tickets, it cannot be elevated to a commercial transaction. The nature and context of the transaction must be inherently mercantile.”

Thus, GST payments or the contractual nature of a booking do not transform the character of a consumer dispute into a commercial one, unless both parties are engaged in commercial activity in relation to the transaction.

“Commercial Courts Are Not Open Doors for All High-Value Claims” — Strict Construction Mandatory

The Court relied extensively on the Supreme Court’s ruling in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP, (2020) 15 SCC 585, which emphasised the need for strict interpretation of the term “commercial dispute”. Quoting from the decision, the High Court noted:

“The very purpose for which the Commercial Courts Act was enacted would be defeated if every other suit, merely because it is filed before the Commercial Court and involves high value, is entertained. Such suits will clog the system and block the way for genuine commercial disputes.”

Further reinforcing this view, the Court cited Meena Vohra v. Master Hosts Pvt. Ltd. and Glasswood Realty Pvt. Ltd. v. Chandravilas Kailashkumar Kothari, where courts held that a transaction must be supported by documentation evidencing trade, business, or mercantile activity, and not just a one-off consumer service.

“Consumer Contracts Are Not the Domain of Commercial Courts” — Return of Plaint Justified

Having found that the ticket purchase was purely personal in nature — not linked to any trade, business, or commercial activity — the High Court agreed with the Commercial Court's finding that jurisdiction was lacking.

“It is trite law that prayer for return or rejection of plaint under Order VII Rules 10 & 11 CPC has to be considered only on the basis of averments in the plaint. What we find is that the dispute does not qualify to be a ‘commercial dispute’ under Section 2(1)(c) of the Act.”

Accordingly, the Court upheld the return of plaint with liberty to refile before an ordinary civil court and concluded that there was no illegality or error in the Commercial Court’s decision.

Refund Claims from Personal Travel Are Not “Commercial Disputes” — Airlines and Passengers Bound by Consumer Remedies

The judgment draws a clear boundary between consumer contracts and commercial litigation, asserting that not all high-value or contractual disputes involving services fall under the jurisdiction of Commercial Courts. It underscores the need to protect the specialised forum of Commercial Courts from being flooded with personal claims disguised under business terminology.

This decision is especially relevant for airline passengers, tour operators, and legal practitioners attempting to invoke the Commercial Courts Act for faster resolution. The ruling makes it unequivocally clear: “A ticket dispute is not trade.”

Date of Decision: 23rd September 2025