Jet-Sahara deal lands up in courts, uncertainty likely to linger

New Delhi, June 21 (UNI) In a fresh twist to the Jet Airways-Air Sahara merger episode, a local court in Lucknow today froze an escrow account which was to expire at midnight and prevented Jet from withdrawing the bank guarantee till June 23.

Amid reports that Jet wanted to wriggle out of the deal, Sahara alleged that Jet was looking for a price cut from the agreed Rs 2,300 crore to Rs 1,800 crore. But Sahara is not willing to accept a price reduction.

Jet has paid Rs 700 crore so far to Sahara -- Rs 120 crore as commitment fee, Rs 500 crore as advance and Rs 80 crore towards capital expenditure. While Jet seems prepared to forego the Rs 120 crore commitment fee, Sahara is determined to hold on to the entire amount if Jet reneges on the deal.

Early during the day, Jet filed a petition in the Bombay High Court to prevent Sahara from withdrawing Rs 500 crore from the escrow account. Jet also filed a caveat and insisted the case be heard in Mumbai. In another move, Jet Airways filed arbitration proceedings to maintain status quo and prevent Sahara from taking legal action if the merger deal falls through.

Fixing June 23 as the next date of hearing, district judge Shiv Charan Verma passed the order on a petition filed by Sahara under provisions of the Arbitration Act. Sahara had moved the court in reaction to Jet's petition earlier during the day.

Uncertainity about the largest aviation deal in Indian skies is sure to linger on in coming weeks and months, industry experts said.

Senior officials of the home ministry were to meet today to decide on security clearance to Jet Airways chairman Naresh Goyal.

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