An out-of-court settlement seems unlikely in the Jet Airways and Sahara India Commercial Corporation (SICCL) case. The court has asked both parties to sit across the table and sort out the dispute before the case comes up for hearing in the Bombay High Court on July 19. SICCL dragged Jet to court in 2009 over tax liability issues.
Advocate Janak Dwarkadas, Jet's counsel told moneycontrol.com, "The next hearing will come up on July 19. I am not aware of any out-of-court settlement."
According to industry experts, an out-of-court settlement would end the legal tussle. Also, despite the court giving directions to Jet to undertake business transactions for its movable assets, Jet would find it little difficult due to the ongoing legal case with SICCL.
In the fourth quarter analyst call Jet had said that it wants to undertake sale-and-leaseback transaction of a few of its B737 aircraft. Under a sale-leaseback arrangement, the aircraft owner sells the aircraft to the lender or lessor who then immediately leases the aircraft back to the original owner. There will be no interruption or disruption of aircraft operations, but the transaction should give the company some extra cash. There also may be changes concerning taxes and the way in which the aircraft is accounted for on the company's balance sheet.
Meanwhile, the case dates back to 2007, when Jet had agreed to buy Sahara Airlines in April 2007 for Rs 1,450 crore. It paid about Rs 900 crore in the same month and started operating Sahara Airlines as a low-cost carrier, renaming it JetLite. Jet had agreed to pay the remaining Rs 550 crore in four interest-free equal installments annually from March 30, 2008. Jet, which was paying part of the acquisition price in installments to Sahara, reportedly deducted some amount from the installments after the income tax department raised certain tax obligation from Sahara Airline (now JetLite) prior to Jet’s takeover.
28/06/11 Shaheen Mansuri/moneycontrol.com
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