IATA can encash bank guarantees provided by Cox & Kings: Bombay HC

The Bombay High Court has allowed International Air Transport Association (IATA) to encash bank guarantees provided by tour operator Cox & Kings. The court on Wednesday vacated its interim stay on invocation of bank guarantee 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 had moved Bombay High Court earlier in the month and secured an interim relief against invocation of bank guarantees. The tour operator’s sister concern ezeego1 also moved court on similar grounds and secured relief. Last week, Cox & Kings and ezeego1 informed the court that the firms would pay IATA Rs 107 crore by Tuesday but they failed to do so. The firms withdrew the pleas on Wednesday but with 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.

Cox & Kings said IATA action was arbitrary and illegal. It further argued 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 were facing financial difficulties and had sought release of payments from IATA.