The Bombay High Court on Wednesday directed the country?s largest airline Jet Airways to pay R478 crore to Sahara India Commercial Corporation Ltd (SICCL) for defaulting on its obligations towards the R1,450-crore takeover of Sahara Airlines (now JetLite).
M Shivkumar, senior vice-president (finance), Jet Airways, told FE: ?We have the right to appeal and will take a decision on whether or not to do so at the appropriate time.?
The amount comprises the final installment as well as interest that Jet had to pay SICCL after it acquired Sahara Airlines in 2007.
Justice DY Chandrachud, while delivering his judgment 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% or Rs 22.05 to close at Rs 447.30 on the Bombay Stock Exchange on Wednesday, on a day the benchmark 30-share Sensex fell 0.35% or 65.33 points.
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 March 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 starting March 2008. The original consideration was Rs 2,000 crore, but later negotiations pegged the price at Rs 1,450 crore, provided Jet made all payments before March 31.
Jet?s Shivkumar said: ?The judgment is great news for Jet. 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.
?Jet will now be free to carry out sale and lease of its aircraft, since it does not have to take the court?s consent for every major deal it undertakes,? said an analyst with a Mumbai brokerage.
Differences between the two companies surfaced when Jet started deducting SICCL?s income tax liabilities from the installments 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, Jet?s 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. On the second installment, it deducted Rs 50 crore. This was done after the income-tax department raised a tax demand of Rs 107 crore on the then Sahara Airlines, which, Jet claimed, is for a period prior to its takeover of Sahara. However, Sahara has been contesting this, saying it is not liable to any income tax claims on the erstwhile Sahara Airlines.