The Bombay High Court on Monday advised Jet Airways and Sahara India Commercial Corporation to resolve their dispute over an income tax liability out of court. Justice DY Chandrachud expressed hope, while hearing a separate application by Jet, that both the parties would sit together to sort out their differences over the issue.

Jet and Sahara are fighting a legal battle over an income tax payment. The origin of the dispute dates back to April 2007. Jet had agreed to buy Sahara Airlines for Rs 1,450 crore, but paid about Rs 900 crore. The remaining amount of Rs 550 crore was to be paid in four equal installments. One of the clauses in the agreement between the parties stated that if there was a tax liability of over Rs 50 crore for the period before the filing of consent terms, the same would have to be borne by Sahara.

When a tax liability of Rs 107 crore arose, the Jet paid only Rs 100.50 crore as the first installment after deducting the tax liability in March last year, to which Sahara did not raise any objections. However, when Jet did the same in March this year, Sahara claimed a default of Rs 37 crore. The High Court will hear the case on Wednesday.