The Indian Railways Catering and Tourism Corporation (IRCTC) offers the option of "auto-upgradation" of class to full fare-paying waitlisted passengers, to the next higher class, in case vacant berths are available.
Through this option, the Railways fills up vacant accommodation, and the passengers get higher class accommodation at literally zero extra cost.
Here's all you need to know about the scheme.
About upgradation authority; ticket cancelation; upgradation levels
The upgradation is automatically facilitated by the Passenger Reservation System (PRS). Train conductors or Ticket Examiners have no authority to upgrade any passenger to a higher class.
If an upgraded passenger cancels their ticket, cancelation charges of only the original class is payable.
The upgradation is done to only the next higher class, ie. from SL to 3AC, 3AC to 2AC, and so on.
About waitlisted passengers and allotment of upgraded passengers' original berths
Notably, only the waitlisted passengers are offered upgraded class berths under this option. The remaining vacant berths, if any, are transferred for bookings via current counters.
The original berths of those passengers who've been upgraded to a higher class, are allotted to RAC and waitlisted passengers of that class.
If even more berths are available, they are allotted to confirmed passengers of the lower-class.
About number of passengers, and berth selection choices
Further, all the passengers under one PNR (maximum 6) are upgraded together. If enough berths for accommodation of all passengers aren't available, no upgradation is done, at all.
Additionally, passengers who have opted for the auto-upgrade option while booking their tickets, cannot exercise choices for the upgraded berths, such as choice between upper berth or lower berth, cabin berth or side berth etc.
About PNR information and final charts preparation
The original PNR information of upgraded passengers remains the same, and all the details from PRS are provided when an inquiry is made with the original PNR.
The final charts of the upgraded class include the names of upgraded passengers against their allotted (upgraded) coach and berth numbers, and an indication denoting their upgraded status, so as to avoid any confusion.