NZTA believed the bus' brakes had defects, despite records showing they had been cleaned, adjusted and checked by mechanic James Coakley only days before the crash.
Because of concerns arising out of that inspection, NZTA and a police safety officer checked 27 of Travlon's vehicles and identified faults with 18 of them.
A further audit identified faults with 22 vehicles and Travlon put in place a safety and maintenance plan.
In February last year, one of Travlon's buses crashed on the Akaroa Highway and 26 passengers were injured, some seriously. The driver reportedly slumped over the steering wheel.
A fault was found with a brake but it is not believed to have contributed to the crash.
Another inspection of the company's vehicles last year found faults with 14 vehicles.
A report from an NZTA vehicle specialist said: "The fleet audit showed that the vehicles being operated by Travlon were being operated below a safe standard while in service and that the mechanic in charge of bus maintenance [Mr Coakley] is operating at a skill level well below that expected of a competent heavy vehicle mechanic. In my opinion, the types of faults being found, and the number of faults found, demonstrate major failings in the mechanical servicing and maintenance of the Travlon fleet."
NZTA issued a notice proposing to revoke Travlon's licenses and owner Alexander Bruce responded with numerous criticism of how the agency had carried out its checks and said that its conclusions were not justified.
Bruce said that Travlon engaged in the audit process in good faith and that for most of the relevant period had its vehicles independently reviewed every three months.
The company was committed to complying with the law and to improving its service.
After NZTA revoked the licenses, Travlon filed an appeal and a challenge to the action and made a bid to keep them in the meantime.
Justice Gerald Nation, in his decision, said if the company lost its licenses immediately that would put the 30 drivers' jobs at risk and also impact the community that used its services.
He noted that Travlon was no longer using Coakley as a mechanic that the AA was helping the business check its buses.
"I accept that Mr Coakley's competence was a the forefront of NZTA's concerns," the judge said.
He ordered that Travlon should keep its licenses until May 31 but that all its vehicles should be checked by the AA.
The company will need to re-apply for its licenses to keep operating after that, unless its court action against revocation is successful.
