Hearing on Jet, Sahara appeals on July 19

MUMBAI: The Bombay High Court has admitted Sahara India's appeal that Jet Airways is liable to pay an interest rate of 18% on payment due for the buyout of Air Sahara (now Jetlite).

Sahara India had challenged a high court order that pegged the interest rate on the outstanding payment at 9%. A division bench comprising Chief Justice Mohit Shah and Justice JS Godbole also admitted Jet's appeal that it had not defaulted on payment adjusting for tax and is not liable to pay any interest.

The hearing for both the appeals has been fixed on July 19. "Both the appeals from Sahara and Jet was admitted in the court. However, those maintainable or not will be decided in next hearing," the division bench said.

In May, a single-judge bench had ordered Jet to pay 478 crore to Sahara within two weeks as dues for Air Sahara buyout. The default amount was calculated on the renegotiated deal price of 1,450 crore at a rate of 9% from 2008.

The outgo could impact Jet's financials, which is already under stress on rising fuel cost and unfavorable market condition to raise money to retire debt and expand. According to people familiar with the development, "Jet wants to enter into development agreement with Godrej Properties for its Bandra Kurla Complex land, which could strengthen the company's balance sheet and increase asset size." Law firm DSK Legal is representing Subroto Roy's Sahara, while Jet is represented by Gagrats & Co.

On Tuesday, the Jet Airways scrip closed at 446.95 on Bombay Stock Exchange, down nearly 1% from the previous close.