The Supreme Court of India ordered Essar Oil to pay dues of Rs 5,189 crore, along with 10 per cent interest on this amount from January this year, to government of Gujarat.

Essar Oil had requested the apex court to grant it a time period of at least three years to pay the dues, while the government of Gujarat had sought the payment of the dues within a period of six months.

But, a Bench headed by Justice AK Patnaik directed the Ruias-owned oil company to pay the principal amount in eight quarterly installments, with first installment to be paid before Jan 2, 2013.

The Bench also ruled that the oil company didn't owe Gujarat government $327 million in interest on its tax bill, and allowed the company to repay the $939 million dues in tax in eight installments over two years.

The oil company was left owing a total of $1.2 billion in taxes to Gujarat government, following a ruling that stated that the company was no longer allowed to defer sales tax payments.

Commenting about the ruling, the London-listed Essar Energy's subsidiary said, "The Supreme Court judgement brings to an end the deferred sales tax repayment issue in respect of Essar Oil."

Stock in Essar Energy, which owns an 87 per cent stake in Essar Oil, jumped 6 per cent to close at 114.7 pence a share in London, following the ruling.