Jet drags Sahara chief to court

30 June 2006

Mumbai: Jet Airways on Friday filed a civil suit in the Bombay High Court against Sahara group chief Subroto Roy for recovery of the Rs500 crore advance it paid to Air Sahara in the failed Rs2,300 crore acquisition deal.

The petition was filed on the grounds that Roy had personally guaranteed refund of the advance in case the deal fell through. Jet had on Thursday filed an arbitration suit in the High Court seeking transfer of the cases initiated by Air Sahara in the Lucknow district court to Bombay High Court and praying 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.

Jet, however, contented that the advance amount paid should be returned immediately as Sahara failed the deal. "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," the Jet petition 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 had contended.