The Bombay High Court has given its nod to Interglobe Aviation Ltd, which runs IndiGo, for replacing engines of a grounded aircraft and fly it out after submitting a Rs 8-crore bank guarantee to civic authorities.
Interglobe Aviation had challenged the demand of Brihanmumbai Municipal Corporation (BMC) of octroi on two imported engines before the high court.
The aircraft was grounded in January following an engine fire. Interglobe was advised to import two engines to replace the damaged ones.
A division bench of justices Anil Menon and M S Sanklecha ruled that Interglobe can install the new engines and fly the aircraft to Gurgaon provided it gave a bank guarantee to the civic body.
BMC lawyer Jimmy Pochkhanwalla assured the court that A V Bhangle, deputy assessor and collector with the civic body, would give a hearing to the company before deciding on the octroi levy issue.
Pochkhanwalla also said that the BMC, which had demanded Rs 8 crore in octroi, was ready to accept a bank guarantee.
The court said keeping the aircraft grounded in the meantime would serve no purpose, so the company may replace the engines and fly it out of Mumbai "for business purpose" after it gave the bank guarantee.
Also, if the order of assessor/collector of BMC went against the company, the BMC will not encash the bank guarantee for three weeks, the judges said.
Earlier, arguing against levy of octroi, Interglobe's lawyer Iqbal Chhagla said the aircraft engines were not going to be "used in limits of BMC".
Use of the imported goods within Mumbai limits was necessary to attract octroi, the company contended.
The HC however disposed of the case, saying this was a factual issue which the BMC's assessor could decide.
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