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Gagrats and DSK Legal bring finality to the Jet-Sahara battle before the Bombay High Court
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Gagrats and DSK Legal bring finality to the Jet-Sahara battle before the Bombay High Court

Bar & Bench

It appears that the four-year legal battle between Jet Airways and Sahara India has come to an end. The Bombay High Court rejected the petition filed by Sahara claiming Rs 2,000 crore ($440 million) as the total sum for the takeover instead of the renegotiated amount of Rs 1,450 crore ($322 million) agreed between Jet and Sahara during the 2006 takeover deal of Sahara Airline, according to TOI.

It appears that the four-year legal battle between Jet Airways and Sahara India has come to an end. The Bombay High Court rejected the petition filed by Sahara claiming Rs 2,000 crore ($440 million) as the total sum for the takeover instead of the renegotiated amount of Rs 1,450 crore ($322 million) agreed between Jet and Sahara during the 2006 takeover deal of Sahara Airline, according to TOI.

Jet Airways purchased Sahara in 2006 after which there were disputes regarding the valuation of the company. In April 2007, a three member Arbitration panel cleared a buy out deal for Rs 1,450 crore, which many analysts claim a 40% reduction from the originally agreed price. Harish Salve had represented Jet Airways before the 3 member arbitration panel comprising of British Judge Lord Stein and Supreme Court Justices S P Bharucha and Jeevan Reddy.

Business Standard which had followed the dispute in great detail reported that under the 2007 Arbitration agreement, Jet was to pay the balance Rs 550 crore by 2011. However, a problem began in March 2008, when Jet released only Rs 100.4 crore (instead of the agreed Rs 137.5 crore), after deducting the amount claimed by income tax authorities.

The agreement stipulated the concession in purchase price would automatically stand withdrawn and Jet would be liable to pay Rs 2,000 crore (Rs 550 crore in addition to Rs 1,450 crore) if it defaulted on paying the entire sum. However Jet argued that the liability to pay the additional Rs 550 crore would arise only if Sahara’s owners performed their indemnity obligation to reimburse Jet for any undisclosed tax liability prior to the takeover of the airline.

The Bombay HIgh Court yesterday held that Jet was liable to pay Sahara only Rs. 1,450 crore and Sahara had failed to meet its obligation to disclose and pay its tax liability, hence cannot claim additional Rs 550 crore. The Court further added that Jet was wrong in deducting the tax amount from its instalments and therefore, the Court imposed 9% interest on pending instalment amount since March 2008.

Justice Dhananjay Chandrachud held that Jet Airways was liable to pay Rs 478 crore, which includes interest at 9 per cent per annum. The amount was computed on the principal amount of Rs 402 crore.

Janak Dwarkadas, Senior Advocate with Zal Andhyarujina were assisted by Jet Airways’s long term counsel Gagrat & Co.

DSK Legal’s Partner Jatin Pore briefed Senior Advocate Pradeep Sancheti who appeared for Sahara.