In what could signal the end of a two-year legal battle, the Bombay High Court today directed Jet Airways to pay Sahara India Rs 478 crore within two weeks. This would complete Jet's Rs 1,450-takeover of Sahara Airlines (now JetLite).

Mr Justice Dhananjay Chandrachud held that Jet Airways was liable to pay Rs 478 crore, which includes interest at 9 per cent per annum. The amount was computed on the principal amount of Rs 402 crore, the Court said in an oral order.

The judge, however, rejected the petition filed by Sahara claiming Rs 2,000 crore as the total sum for the takeover on account of default in payment, instead of the initial amount of Rs 1,450 crore agreed between the two airlines.

Since Jet Airways had already deposited Rs 275 crore with the Court, the remaining Rs 203 crore will be paid in two weeks. This includes Rs 87 crore the airline has already deducted as tax, and Rs 116 crore which is the interest element. “For the Rs 87 crore that we have paid to the Tax Department, we have already got the refund from them so my cash outflow is not going to be there at all on those counts,” Mr M. Shiva Kumar, Senior Vice-President (Finance), Jet Airways, told Business Line .

He added that the company will also get Rs 10 crore as interest for depositing Rs 275 crore with the Court and hence the impact of the judgment on the company's accounts book would be Rs 106 crore.

normal business

With the completion of the payment, Jet Airways will be released from all undertakings it had given Sahara India and the airline can now resume normal business without any impediment or having to go to the Court to get consent for land deals or for sale and leaseback of aircraft amongst other things.

Jet Airways 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. However, a dispute arose between the two airlines on payment of income-tax dues with each claiming it was the responsibility of the other to pay.

Jet Airways contended that in March 2008, the I-T Department had demanded tax dues of Rs 107 crore from Sahara. The airline claimed that this amount was due from the Sahara Group as it pertained to the period before the acquisition.

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 towards tax dues.

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