In the midst of Go First’s ongoing insolvency proceedings, the National Company Law Tribunal (NCLT) has issued a notice to the Committee of Creditors (COC) regarding a plea filed by the Resolution Professional (RP) seeking the refund of cancelled bookings. The RP needs the CoC nod before issuing refunds to passengers, NCLT told the RP. The RP’s request for ₹597-crore refund to passengers has sparked a legal battle, with the initial amount sought of ₹450 crore raising concerns over passenger reimbursements. The NCLT has scheduled a hearing for August 7 to address the matter.

Go First approached the NCLT for voluntary insolvency on May 2. Despite the insolvency filing, the airline continued to take bookings until June 7, when the Directorate General of Civil Aviation (DGCA) requested them to cease further reservations. As the company struggles to navigate through its financial turmoil, the issue of passenger refunds has taken centerstage in the insolvency proceedings.

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Lawyers representing the RP have argued that the airline predominantly received 97 per cent of its bookings through aggregators, who maintain an escrow account, where they deposit money to facilitate customer reservations. The remaining three per cent of bookings were made directly through Go First’s website. The RP’s proposal of a gradual refund payout to customers, once the airline resumes operations and cash flows stabilise, adds complexity to the situation.

In a prior ruling on July 26, the NCLT rejected the request of six lessors, who sought to prevent Go First from utilising their leased planes for passenger flights during the insolvency proceedings. The NCLT’s decision reaffirms the necessity for the airline to operate using its existing resources, considering the legal framework surrounding insolvency cases.

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