Bombay High Court Vacates Its Interim Stay Order And Allows IATA To Encash Cox & Kings Bank Guarantees

The International Air Transport Association (IATA) has been permitted by the Bombay High Court to encash bank guarantees provided to it by tour operator Cox & Kings which had defaulted on its payments.

The court vacated its interim stay on invocation of bank guarantees after Cox & Kings withdrew its commercial arbitration petition challenging IATA's action.

Earlier, IATA had suspended Cox & Kings from selling airline tickets on credit after it defaulted on its commercial paper payments.

After this development, Cox & Kings moved the Bombay High Court and secured an interim relief against invocation of its bank guarantees. Cox & Kings sister concern ezeego1 also moved the court on similar grounds and secured relief.

However, later Cox & Kings and ezeego1 informed the court that they would pay IATA Rs 107 crore, but failed to do so.

Both the companies withdrew their petitions later but retained their liberty to challenge IATA’s move to suspend them from selling tickets.

Cox & Kings had stated in its petition that the IATA action against it was arbitrary and illegal. It had also argued that the IATA move led to non-payment by its customers resulting in a default on payments to the airline body.

Subsequently, the Bombay High Court allowed the withdrawal of their petitions without prejudice to the rights and contentions of the parties.