A GROUP of Indian students has failed in its first attempt to recover money from a Sydney flying school they claim failed to provide them with resources necessary to complete their flight training on time.

The nine trainee pilots have alleged Aerospace Aviation at Bankstown in Sydney did not have enough teachers or aircraft to complete their training on time, and have sought more than $150,000 in refunds on prepaid course fees.

A Supreme Court judge yesterday set aside a statutory demand issued to Aerospace Aviation by the students and ordered them to pay the court costs of the school, saying the demand was "entirely misconceived".

Justice Richard White said the avenue taken by the students to seek refunds was not the correct one, as statutory demands were for the recovery of established debts, not "disputed demands".

It is understood the statutory demand was filed on the advice of a non-practising lawyer who offered his services to the students for free, not their current solicitor Gnana Karam.

A counter-claim by Aerospace Aviation, filed in the Supreme Court, alleges the students owe the school outstanding fees.

The flight school has denied the students' claims that the training facility lacks resources, arguing the students failed to meet their study commitments.

Justice White added that the inclusion of multiple claims in the students' demand was also problematic.

The students, four of whom are back in India because they cannot afford to pay for training at alternative flying schools in Australia, are yet to decide whether to take further legal action.

The Vocational Education and Training Accreditation Board is considering whether to take action against Aerospace Aviation.