The Hindu Business Line : Bombay High Court to hear Jet-Sahara dispute

The Bombay High Court on Thursday said that it has jurisdiction to arbitrate on the dispute between Jet Airways and Air Sahara and that it will hear all the four petitions pending in that matter.

After hearing both the sides, Mr Justice D.K. Deshmukh said that the court had inherent jurisdiction in the matter. This rings the curtain down on the issue of where the Jet-Sahara dispute would be heard. The hearing will continue on Friday for the pending cases.

Escrow Account

In January 2006, Jet had announced its intention to acquire 100 per cent stake in Sahara Airlines for Rs 2,000 crore. Jet had subsequently advanced Rs 500 crore to the shareholders of Sahara Airlines against a pledge of 100 per cent of the airline's shares and the personal guarantee of the Sahara Chief, Mr Subrata Roy, while leaving Rs 1,500 crore in the escrow account with ICICI Bank. In addition to this, Jet has claimed that between January and June, the company provided financial support to Sahara Airlines to the extent of Rs 180 crore to meet operational requirement.

As the 90-day extension period ended on June 21, the deal did not fructify. The dispute with regard to termination of the Share Purchase Agreement has been referred to arbitration. The issue of Rs 1,500 crore lying in Escrow and the advance amount of Rs 500 crore paid by Jet is now being heard at the Bombay High Court.

Escrow Agreement

Mr Harish Salve counsel for Jet Airways argued in the court that since Rs 1,500 crore was paid by Jet using an Escrow agreement, which has a jurisdictional clause in Mumbai, the matter should be heard in Bombay High Court. Air Sahara counsel Rohit Kapadia countered that the Bombay High Court did not have the authority to hear the case as the share purchase agreement for the deal was signed outside Mumbai.

The Supreme Court on August 28, 2006, had directed the Bombay High Court to hear all the disputes relating to the Air Sahara-Jet Airways deal collapse.

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