Wednesday, May 4, 2011

HC ruling ends Jet-Sahara row

Mumbai: Bringing an end to the legal row between Jet Airways and Sahara India over the multi-crore takeover deal, the Bombay high court on Wednesday held that Jet was liable to stick to the renegotiated Rs 1,450-crore purchase price to Sahara Airlines and pay the balance amount of Rs.478 crore within two weeks.
In its 73-page order, the court said out of the Rs.478 crore due to Sahara Airlines (now Jetlite), Jet has already deposited Rs 275 crore with the court. This amount, with interest accrued thereon, would be paid to Sahara by the court and the balance would be paid by Jet.
Jet’s liability to pay Rs 478 crore includes 9 percent interest on the principal sum of Rs 402 crore which works to Rs 9.92 lakh per day or a little over Rs 75 crore.
Jet’s counsel Janak Dwarkadas made a statement before the court that they would make the payment within two weeks. Justice Dhananjay Chandrachud, however, rejected the petition filed by Sahara claiming Rs 2,000 crore as the total sum for the takeover instead of the renegotiated amount of Rs 1,450 crore agreed between the two parties. Jet bought Sahara Airlines in April 2007 for Rs 1,450 crore after an arbitration award.
It paid Rs 900 crore and agreed to pay the balance in four instalments.
“We welcome this verdict and it is very good as the court has accepted our side,” Jet Airways senior vice-president for finance M Shiv Kumar said.
A dispute then arose between Jet and Sahara over the payment of income tax dues, each claiming it was the responsibility of the other to pay the amount. Jet contended that in March, 2008, the IT Department had demanded tax dues of Rs 107 crore from Sahara.
According to Jet, this amount was due from Sahara Group as it pertained to the period before the acquisition but this was contested.
While paying Sahara an instalment of Rs 137 crore in March, 2008, Jet deducted Rs 37 crore against I-T dues. Again in 2009, Jet deducted another Rs 50 crore toward tax dues. Sahara contended that it was not liable to pay tax dues since the airline had already been taken over by Jet Airways.
During the course of the hearing, certain properties of Jet were attached. Jet had given an undertaking in the high court that it will not dispose of the property till the payment is made to Sahara or till the dispute is settled between them.
The court held that this undertaking would stand dissolved once the dues are paid because by then, the solvency of Jet Airways would be established. PTI

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