The Bombay High Court on Monday upheld its earlier order which had ruled that Jet Airways was liable to pay the renegotiated amount of Rs 1,450 crore (Rs 14.50 billion) instead of the original determined price of Rs 2,000 crore for the purchase of Sahara Airlines (now Jetlite) in 2007.
The high court also upheld its earlier order asking Jet Airways to pay nine per cent interest on the balance amount of purchase price to Sahara.
A division bench comprising Chief Justice Mohit Shah and Justice G S Godbole dismissed appeals of Sahara India and Jet Airways challenging the May 5 order of the single bench of Justice D Y Chandrachud.
There is also ambiguity regarding the case as Sahara had moved the high court and also filed a Special Leave Petition in the Supreme Court, within the prescribed period of 90 days against the impugned order of the single judge.
The bench pronounced that both appeals filed by Sahara India and Jet Airways were "not maintainable" as only SLP lies against the order of the single judge. Earlier, Jet had given an undertaking that it will not dispose of the property during the pendency of the appeal filed by Sahara.
On a plea by Sahara, the division bench has also extended the undertaking by six weeks. Sahara had contended that Jet Airways was liable to pay Rs 2,000 crore, the original buyout price, instead of the renegotiated amount of Rs 1,450 crore because the latter had defaulted in paying instalments by deducting income tax dues.
Both sides had agreed to the renegotiated price on condition that Jet would not default in paying instalments.
Jet Airways contended that they were not liable to pay interest on balance amount at nine per cent as they had not defaulted in payments but had only deducted income tax dues which were liable to be paid by Sahara.
In the appeal, Sahara has staked its claim for Rs 2,000 crore (Rs 20 billion), the original price for the buyout. It said the court had erred in holding that Jet Airways was liable to pay the renegotiated amount of Rs 1,450 crore.
Sahara sought a stay on the order passed by Justice D Y Chandrachud on May 5. The judge had asked Jet Airways to pay the remaining amount of Rs 478 crore (from the purchase price of Rs 1,450 crore) within two weeks to Sahara for the buyout.
The Rs 478 crore (Rs 4.78 billion) comprised interest accrued at the rate of nine per cent, as ordered by the judge, on the initial pending amount of Rs 402 crore (Rs 4.02 billion).
Sahara pleaded in its appeal that nine per cent interest was less and it should get more. After the deal was signed, Jet had paid Rs 900 crore (Rs 9 billion) to Sahara and agreed to pay the remaining amount in four instalments from 2008.
The Income Tax department had earlier slapped a notice of Rs 107 crore (Rs 1.07 billion) on Sahara. While Jet said Sahara was liable to pay this amount as it pertained to period before acquisition of the airline, Sahara argued it was not liable to pay for it.
On account of the I-T notice, Jet deducted Rs 37 crore (Rs 370 million) and Rs 50 crore (Rs 500 million) respectively, from the two instalments it had paid to the Lucknow-based corporate group.
This prompted Sahara India to contend in the high court that Jet Airways had defaulted in payment, a charge which the latter contested.