Bombay High Court allows IATA to encash Cox & Kings bank guarantees

The Bombay High Court has allowed the International Air Transport Association (IATA) to encash bank guarantees provided by tour operator Cox & Kings. The court vacated its interim stay on invocation of bank guarantee on Wednesday after the tour operator withdrew its commercial arbitration petition challenging IATA's action. 

Last month IATA suspended Cox & Kings from selling airline tickets on credit after it defaulted on commercial paper payments. The tour operator moved the Bombay High Court earlier in the month  and secured an interim relief against invocation of bank guarantees. Its sister concern ezeego1 also moved the court on similar grounds and secured relief.

Last week Cox & Kings and ezeego1 informed the court that the companies would pay IATA Rs 107 crore by Tuesday but they failed to do so. The firms withdrew the petitions today but with the  liberty to challenge IATA move to suspend them from selling tickets. Based on the plea, Justice G S Kulkarni allowed the withdrawal of the petitions without prejudice to the rights and contentions of the parties.

In its petition Cox & Kings said IATA action was arbitrary and illegal. It further argued that the IATA move led to non payment by its customers resulting in a default on payments to the airline body. Birendra Saraf, IATA's counsel said  there was no ground for  an injunction on invocation of bank guarantee.  He said airlines are facing financial difficulties and had sought release of payments from IATA.