Sahara moves court to freeze escrow account; Jet calls off deal

21 June 2006

The Jet-Air Sahara battle intensified on Wednesday with Air Sahara securing an interim order from a Lucknow court restraining Jet from withdrawing Rs500 crore from the escrow account. Sahara informed the court that Jet has terminated the Rs2,300-crore takeover agreement.

The petition, filed by Sahara India Commercial Corporation Ltd, the holding company of Air Sahara, under section 9 of the Arbitration and Conciliation Act, said Sahara feared that Jet Airways would be at liberty to withdraw the escrow amount after midnight tonight - the deadline for the share purchase agreement.

District and session judge Shiv Charan Singh in his interim order also restrained the bankers to the deal ICICI Bank from making any payments to Jet. "It has been alleged on behalf of the petitioner that the opposite party (Jet) has terminated the contract, hence there is a dispute and for which arbitrator is to be appointed in due course," the order said.

The court gave Jet Airways time till June 23, the next date of hearing, to file objections to Sahara''s contention.

Jet Airways, meanwhile, approached the Bombay High Court seeking a similar restraint on Air Sahara operating the escrow account, saying that Air Sahara has failed to meet conditions like transfer of infrastructure facilities agreed upon by the June 21 deadline.