The Bombay High Court (HC) on Wednesday directed private carrier Jet Airways India Ltd to pay Rs 478 crore to Sahara India Commercial Corporation Ltd (SICCL) for defaulting in its obligations toward the Rs 1,450 crore takeover deal of Sahara Airlines (now Jetlite).
The amount comprises the final instalment as well as interest,that Jet had to pay SICCL after it acquired Sahara Airlines in 2007. Justice DY Chandrachud,while delivering his judgement on a case filed by SICCL in March 2009,also gave Jet two weeks to make the payment. Following the HC ruling,Jet Airways shares plunged 4.7 per cent to close at Rs 447.30 on the Bombay Stock Exchange on Wednesday.
M Shivkumar,senior vice president (finance),Jet Airways said the company has taken no decision as yet on appealing against the ruling. The judgement is great news for Jet, he said. The consideration,that Sahara claimed at Rs 2,000 crore,has been fixed at Rs 1,450 crore by the court. He further said that Jet has already deposited Rs 275 crore with the court. The remaining Rs 203 crore will be paid within two weeks.
The court,however,rejected a petition filed by SICCL,claiming Rs 2,000 crore as the total sum for the takeover. SICCL had claimed this amount on grounds that Jet did not make the entire payment before the stipulated period of Mar 31 this year,a clause included in the original agreement. Jet had initially paid Rs 900 crore to SICCL in cash,and the balance Rs 550 crore was to be made in four annual installments of Rs 137.50 crore each beginning March 2008. The original consideration was Rs 2,000 crore,but later negotiations pegged the price at Rs 1,450 crore,if Jet paid before March 31. Sahara is likely to challenge the ruling before a division bench of the HC.
Issues surfaced between two companies when Jet began deducting SICCLs income tax liabilities from the instalments which they paid to the former as per the agreement. In March 2009,when Sahara informed the court that Jet had not paid the installments in full,Jets explanation was that it had paid an amount of Rs 100 crore as the first installment,after deducting Rs 37.50 crore paid by Jet to the income tax department.