Mumbai, Sept. 22: Bombay High Court today permitted Jet Airways to withdraw Rs 1,500 crore from the escrow account that was created in January for the acquisition of Air Sahara.
The deal soured when Jet Airways terminated the shareholders’ agreement because the necessary approvals for the merger had not come through from the civil aviation authorities by the June 21 deadline.
“The court has allowed Jet Airways to withdraw the amount from the escrow account, while the interest accrued on the same will go to Air Sahara,” said Satish Kishanchandani, legal counsel of Air Sahara. Jet will have to provide a bank guarantee for the same amount. The escrow account is maintained at ICICI Ban’s Nariman Point branch.
Jet Airways lawyer Harish Salve said the company will submit the bank guarantee on Monday.
Justice D. K. Deshmukh today passed an interim order for all the four cases related to the failed Jet-Sahara deal.
An arbitration tribunal, comprising retired Supreme Court chief justices S.P. Bharucha and Jeevan Reddy, and Lord Stein, has been formed, which will adjudicate on all the remaining formalities regarding the escrow account and all other related disputes.
The interim order shall also be modified subject to the decision of arbitration tribunal, which will hear the case on October 9.
Under the terms of the takeover contract, Air Sahara was entitled to receive the interest accruing on the escrow account till the expiry date of the contract, which was June 21, if the deal fell through. Jet had the right to withdraw the actual amount deposited in the escrow account.
However, since Air Sahara brought in an injunction which put a bar on Jet withdrawing the amount, interest continued to accrue till date.
According to the interim order, the interest accrued till date will go to Air Sahara. However, Jet can claim the accrued interest from June 21 onwards during the arbitration process, its legal counsel Janak Dwarkadas said.
Jet Airways had signed the agreement to acquire 100 per cent equity stake in Air Sahara in January this year.
As part of the deal, Jet had paid Rs 180 crore for the revival of Air Sahara and Rs 500 crore in lieu of Air Sahara shares pledged with it, besides depositing Rs 1,500 crore in an escrow account opened for the purpose with ICICI Bank.
After the deal fell through on June 21, Air Sahara moved a court in Lucknow seeking to bar Jet from operating the escrow account, prompting Jet to approach the Mumbai high court. Also, on June 23, another interim order restrained Jet Airways from enforcing the pledge agreement.
On June 29, Jet moved the Supreme Court seeking transfer of an arbitration petition filed by Sahara in the Lucknow district court to Bombay High Court. On July 15, the Supreme Court said the restraining order by the district judge would continue until further notice.
In August, the Supreme Court transferred all petitions to the Mumbai high court, including two petitions filed by Air Sahara in the Lucknow court for hearing. Jet had filed two separate petitions in the Mumbai high court.