New Delhi: Unconvinced by Jet Airways' claims to get back Rs 500 crore paid as advance for Air Sahara's takeover, legal experts say it will be difficult for India's largest airline to prove its case.
"It would solely depend on the outcome of the arbitration and who receives how much from the escrow account," senior Supreme Court lawyer Lalit Bhasin said.
Bhasin, a specialist in corporate affairs, added it would not be easy for either of the two to recover the amount from the ICICI bank (the escrow account holder).
Jet, which has already lost Rs 100 crore as 'commitment fee', in a petition filed in Supreme Court, had argued that as per the Share Purchase Agreement, Sahara was bound to return Rs 500 crore within a week if the deal collapsed.
However, Bhasin said this condition might apply only if both parties were held responsible for the deal's failure. But as both were blaming each other for the failure, the money could even be divided, he said.
Diljeet Titus, another corporate lawyer, is of view that Sahara has more valid points than Jet Airways.
"Jet cannot say that it was unaware of the internal mess in Sahara Air. Sale of Sahara was an open bid and included its assets and liabilities. It was well evaluated by Ernst & Young, which is a firm of international repute," he said.
Legal experts also differ on the duration in which Jet and Sahara could withdraw money from the escrow account, as the matter has become complex and both sides filed petitions in various courts.
Supreme Court lawyer Atul Sharma, who handles the case of Reliance Airport Developers against the award of Delhi airport to GMR, said it would take at least one year.
"It all depends on the sincerity of the both parties to settle their disputes. It would three to four months only in appointing an arbitrator," Sharma said.
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Experts say the sale was also in the nature of contingent contract and Jet cannot plead now that it could not buy Sahara due to reasons such as failure to get Naresh Goyal on the Board or for not getting govt clearance.
"It is quite impossible for Jet airways to reclaim the whole amount. It could only get some portion of it and that even on the name of its operational requirement after a lengthy legal process," Titus said.
However, experts said Sahara would also find it difficult to stop Jet from claiming the amount.
"It would be too difficult for Sahara to claim damages. They did not have much to show the court to claim the damage," Titus said.
"Even if it does, it is not going to get more than Rs 40 crore," he added.
When asked whether the companies had the right to approach courts despite the provision in their Share Purchase Agreement regarding appointment of arbitrators to resolve disputes, experts said it might not be a violation.
"So far neither of them has said they are against arbitration. The case is still regarding the territorial jurisdiction of courts only," Sharma said.
The experts also supported Sahara's move to file a caveat in a court.
"There is provision for arbitration in their SPA but it does not mean that courts cannot pass any interim order in the deal," Bhasin said.
Titus also supported Sahara's stand, saying: "Under the Indian Arbitration Act, 1996 any party is entitled to approach the court until and unless arbitration is started. They are free to mark their protest."
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