JET Airways deposited Rs 137.50 crore with the Bombay High Court, the penultimate day of the current fiscal, even as it continued a prolonged legal battle with the Sahara Group over the payment of taxes. Jet Airways and Sahara India Commercial Corporation (SICCL)â€”the erstwhile owner of Air Sahara â€”are fighting it out in court over who has to pay taxes due to the government prior to the acquisition of Air Sahara in 2007 by Jet.
Jet had moved an application before Justice Dhananjay Chandrachud seeking to deposit the amount with the court instead of paying it to Sahara. Its counsel, Janak Dwarkadas, said that they were willing to let SICCL withdraw the deposited money if Sahara provided a security against it. He told the court that the dispute over Rs 800 crore of tax owned by SICCL before 2007 was yet to be resolved. Jet says that this amount was not disclosed and that Sahara should pay.
Saharaâ€™s lawyer Pradeep Sancheti, however, argued that the money should be given directly to SICCL. He said that depositing money with the court amounted to default. The court upheld Saharaâ€™s right to pursue this line of argument on the issue of default on April 30, when the case comes up for further hearing.
Jet acquired Sahara in 2007 at a price of Rs 1,450 crore. This amount was agreed to after an earlier contract, which required Jet to pay Rs 2,000 crore, fell apart. Jet Airways then paid Rs 900 crore upfront while the rest of the amount, Rs 550 crore, was to be paid annually beginning March 2008. The yearly instalments are Rs 137.5 crore.
The new agreement stipulates that if Jet defaults on payment of the instalments, then Jet will have to pay Sahara the entire Rs 2,000 crore for the buyout instead of Rs 1,450 crore.
But Jet says it later found that Air Sahara owned taxes to the government, some of which it had not disclosed. It then started deducting some of the tax dues from the yearly instalments resulting in both sides ending up in court.
Jet deducted an amount of Rs 50 crore from the annual instalments it paid to SICCL for the acquisition of Air Sahara, on account of the income tax demands. Jet had also deducted Rs 37.50 crore from the first installment in March 2008. Air Sahara is now known as JetLite, a fully-owned low-cost subsidiary of Jet Airways,
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