i've had a couple of instances with airlines in the u.s. when it came to them cancelling flights....getting a refund from them was pretty hard but they were always willing to apply the funds towards a future credit....
i know this is not the ideal solution & these people should not be allowed to get away with something like this but this is just a suggestion on how you may be able to resolve the situation....
if you were based in india however then i would suggest you take them to consumer court....