Jet asks Sahara to return Rs500 crore

29 June 2006

Mumbai: Jet Airways has demanded that Air Sahara return the Rs500 crore advance following the collapse of the Rs2,300 crore takeover deal. An application filed by Jet Air before the Supreme Court said that as per the share purchase agreement (SPA), Sahara India had "undertaken, absolutely and unconditionally" to repay the advance amount of Rs500 crore if the deal failed.

The application sought a transfer of the cases initiated by Air Sahara in the Lucknow district court to Bombay High Court and prayed for a stay on the interim orders of the Lucknow court. The Lucknow court had put a freeze on the escrow account opened by Jet Airways, besides preventing sale of Sahara''s shares pledged for Rs500 crore.

"This repayment in terms of the undertaking is to be made within seven days from the date of termination or expiry of the SPA without any dispute, demur or delay," Jet stated.

Besides, the application said, in terms of Clause 18.5.1 of the SPA, the two sides had agreed to intimate the escrow agent (ICICI Bank) about termination of the deal. As per the clause, the bank was also bound to refund the amount to Jet within one working day, the company said.

Clause 18.1 of SPA clearly mentioned the agreement could be terminated automatically without the mandatory requirement of the notice from any party, if the deal was not completed within 65 days, Jet claimed in the application. And, "in terms of the express and specific provision contained in the SPA (in clause 18.1), it stood terminated at the midnight of June 21, 2006," Jet contended. Jet Airways also sought to clarify its position in relation to the current controversy surroundings its deal with Sahara. Jet some reports in sections of the media have carried an impression that the company "blames" the government for the lapsing of the deal.

Commercial deals are fashioned to respond to events, and they have to be factored in as commercial risks. Government policy, in evolving markets, is always a recognized commercial consideration and is generally dealt with in large commercial deals, Jet said.