Jet, Sahara fail to reach out-of-court settlement

Jet Airways and Sahara India Commercial Corporation told the Bombay High Court today that they could not arrive at an out-of-court settlement to their dispute over the Rs 1,450-crore Sahara Airlines takeover deal.

Urging the court to resolve the dispute, Janak Dwarkadas and Fali Nariman, counsels of Jet and Sahara respectively, submitted it was not possible for them to arrive at an amicable solution to the issue.

The court has now adjourned the matter to August 5.

Meanwhile, Jet’s counesl informed the court that it would respond on July 29 to Sahara’s report on valuation of the erstwhile Sahara Airlines by Ernst and Young.

Sahara in March filed a petition claiming that the Naresh Goyal-owned airline had defaulted on the instalment amount due as payment for acquisition of Sahara Airlines, now JetLite. Hence it was liable to pay the original deal amount of Rs 2,000 crore and not the re-negotiated amount of Rs 1,450 crore.

Sahara contended that Jet had not paid the instalments in full, while Jet claimed that it had paid an amount of Rs 100 crore as the first instalment, deducting Rs 37.50 crore as tax dues.

On the second instalment, it deducted another 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.

Jet acquired Sahara Airlines in 2007 for Rs 1,450 crore. It paid Rs 900 crore in cash; and the rest, an amount of Rs 550 crore, was to be paid in four annual instalments of Rs 137.50 crore each beginning March 2008.