Mumbai: Jet Airways (India) Ltd and Sahara India Commercial Corp. Ltd have failed to reach an out-of-court settlement on their dispute over Jet’s acquisition of Air Sahara.
Representatives of both firms told the Bombay high court on Wednesday that they have not been able to reach the settlement. In June, the court had asked both the firms to settle the matter on their own.
On 30 June, Mint had reported that both the companies were heading for a out-of-court settlement with Jet Airways proposing to pay around Rs300 crore to Sahara as an advance payment to settle.
Jet’s lawyer Janak Dwarkadas said that the court will now hear the case on 5 August.
Fali Nariman represented Sahara India in court.
“Both the parties have ruled out an out-of-court settlement despite best efforts,” Dwarkadas said. Meanwhile, Sahara India has filed an affidavit in the court along with a report prepared by audit and consulting firm Ernst and Young, disclosing the tax liabilities in the Air Sahara deal. Jet will file its reply to the affidavit on 29 July, Dwarkadas said.
Sahara India had on 26 March filed an application with the Bombay high court, claiming Jet Airways had defaulted on payment towards the purchase of Air Sahara, and had sought the court’s permission to seize Jet’s assets.
Initially, the price for Air Sahara was Rs2,000 crore but the two companies renegotiated the deal and eventually settled at a price of Rs1,450 crore.
In its buyout agreement, dated 17 April 2007, Jet Airways said it would pay Rs900 crore to Sahara immediately and agreed to pay the remaining Rs550 crore in four equal instalments beginning March 2008 through March 2011. By 20 April 2008, Jet had paid Rs900 crore.
Jet Airways bought Sahara Airline—which operated Air Sahara—in April 2007, and later rebranded it JetLite.
In March 2008, the income-tax department demanded pending taxes of Rs37 crore from Sahara, now owned by Jet. Jet Airways argued that since the amount was due from Sahara before the deal, it was not responsible for the liability. Jet cleared the income-tax demand but deducted Rs37 crore while paying its March 2008 instalment to Sahara. This was the trigger of the dispute, leading Sahara to claim the original price of Rs2,000 crore from Jet for the deal.
Shares of Jet Airways rose by 2.55% on the Bombay Stock Exchange to close at Rs241.75 each on Wednesday. The exchange’s benchmark index Sensex rose 2.9% to close at 14,253.24.