23 Jan, 2006, 12.01AM IST,TNN

Will Jet-Sahara deal hurt competition?Regulatory structure key to competition

The Indian aviation industry has entered a critical phase as its markets and key stakeholders adjust to the new aviation realities. The marketplace has changed dramatically and permanently. This means a new aviation order is being created. This is going to have a long-term impact on the industry structure.

Jet Airways’ decision to acquire Sahara is very significant from a larger perspective, both in the Indian and Asian context. The competitive landscape has been altered. This combination will dominate the Indian airline market for the near term as Jet will have a larger scale and scope than any other Indian carrier. The next biggest competitor (Indian) will be unable to offer effective competition in the present circumstances.

Jet Airways is a world class airline and has done India proud. However, it has realised that times have changed and that competition is likely to be intense especially in the domestic market. This is Jet’s core business and perhaps a key reason for this acquisition. Sahara’s domestic market will help Jet reach a market share of about 50% and help secure and maintain its leadership position. This was vital from a shareholder perspective. Access to airport and manpower infrastructure will add more power to Jet’s strength

31 Mar, 2006, 12.21AM IST,TNN

Jet-Sahara deal may finally take offNEW DELHI: In a move that comes as a major boost to the Rs 2,300-crore takeover of Air Sahara by Jet Airways, the aviation ministry’s draft guidelines for mergers & acquisitions has provisions that allow transfer of all assets of one airline company to another.

This will enable Jet Airways to take over the aircraft, routes, parking bays, landing slots and hangers that are now vested with Air Sahara. The new guidelines will be notified next week, officials said.

The draft has been finalised by the Aircraft Acquisition Committee and it will need clearance from civil aviation minister Praful Patel before it is made as official policy, they added.

The committee — which functions under the ministry of civil aviation — has been working on the M&A policy draft for airlines since last week.

7 May, 2006, 01.51PM IST,PTI

Report in Jet-Sahara deal by month endNEW DELHI: The probe by the investigating arm of Monopolies and Restrictive Trade Practices Commission (MRTPC) into the Rs 2,300-crore of Air Sahara by Jet Airways has got delayed with the companies seeking more time to file replies on queries. Director general (Investigations and Registrations), which was entrusted with probing whether the buy-out will lead to a monopoly, is likely to submit its report on the deal by this month-end, according to official sources. "Some of the parties have sought time to submit replies on the queries of DGIR and the report may now be finalised only by this month-end," the sources said. The DGIR probe will look into the issue of trade practices with regard to monopolies and restrictive trade practices. DGIR, which has already issued notices to both the carriers, is also banking on aviation experts to arrive at a conclusion on the matter.

However, even as the DGIR looks into the deal, a Government committee has already given it a go-ahead to the buy-out. The Aircraft Acquisition Committee cleared the 100 per cent transfer of all assets of Air Sahara to Jet Airways on March 30, including the transfer of properties as well as rights to parking bays and slots. After issuing new guidelines for mergers and acquisitions in the Indian aviation industry, Civil Aviation Minister has also said that the Government will have nothing to do in the Jet-Sahara deal and they will have the freedom on whether they would merge or set up a separate company post merger.

12 May, 2006, 01.30AM IST,TNN

Jet, Sahara fly closer to mergerNEW DELHI: In a move that paves the way for merger of Jet Airways and Air Sahara, the civil aviation ministry has approved merger and acquisition (M&A) guidelines, which allow transfer of airport infrastructure used by one airline to another.

The recommendations of the aircraft acquisition committee — which drafted the guidelines — have been accepted, civil aviation minister Praful Patel said on Thursday. Since the M&A policy from the civil aviation ministry was not ready, Jet has been running Air Sahara as a subsidiary.

Now that the policy is cleared, the Naresh Goyal-owned airline can merge Air Sahara with itself. Jet had taken over the Sahara Group airline earlier this year in a Rs 2,300 crore deal.

While formal approval from the civil aviation ministry for merger of Jet and Sahara has not been provided, the new guidelines have cleared the hurdles that could have blocked the consolidation.

Spelling out the norms for airport infrastructure transfer in case of mergers or takeover of airlines, Mr Patel said only user rights given to a particular airline on a non-payment basis, might be allowed to be used by the airlines that takes over the aircraft.

In other words, Jet cannot sell or ‘transfer’ the airport infrastructure allotted to Air Sahara. These facilities can be used only by Jet or returned to the airport operator. While declining to comment on the new M&A guidelines, Jet’s executive director Saroj Dutta said his company has already applied for 100% transfer of Air Sahara shares to Jet.

“We are awaiting government's response,” he added. Officials said the new norms would be applicable for all future takeovers. The civil aviation ministry has also said that the aircraft of the target company should also be taken over to justify transfer of infrastructure.

Apart from setting the broad contours for the Jet-Sahara merger, these norms would also influence the way in which the proposed merger of Air-India with Indian progresses, in the months to come. The two public sector airlines are large users of airport infrastructure, especially in the busy Delhi and Mumbai airports.

“It has been decided that only the user rights over such infrastructure that are given to an airline on non-payment basis, like parking bays, landing slots may be allowed to be used by the airlines that takes over the aircraft,” Mr Patel said in a written reply to a question in Lok Sabha.

“For all other rights, the terms of lease/sale agreement between airport operator and airline will apply,” he added. Mr Patel said the user rights may be allowed to be used by the airlines that takes over the aircraft only in respect of those rights, which were actually under use by the airline that transfers the aircraft.

“All other rights will be taken over by the government or the airport operator,” he added. The civil aviation minister said the user rights would be available with the airlines that takes over the aircraft only till such time that the infrastructure concerned was in actual use.

Since the guidelines, firmed up by the aircraft acquisition committee in March, have been accepted by the government, they would apply in the case of all future mergers or takeovers. The ministry is likely to follow these rules in the case of aircraft sale by one airline to another also.

24 May, 2006, 01.54AM IST,TNN

Jet-Sahara deal out of air pocket

NEW DELHI: Paving the way for merger of Jet Airways with Air Sahara, the investigating arm of the Monopolies and Restrictive Trade Practices Commission (MRTPC) has cleared the Rs 2,300-crore deal from the monopoly angle.

The buyout does not violate the existing law on monopolies, the Director General of Investigation and Registration (DGIR) has informed the Commission.

As of now, Jet is running Air Sahara as a fully-owned subsidiary since government clearances are pending. Since the DGIR’s report is likely to expedite MRTPC clearance for the deal, Jet has to now wait for clearance from other wings of the government like the Director General of Civil Aviation.

The DGIR has found that a merger between the two carriers does not attract any provision in the Monopolies and Restrictive Trade Practices Act 1969. Monopolies, per se, has been removed from the commission’s purview by an amendment to the law in 1991.

However, monopolistic trade practices by a company is still an offence. A merged entity has to come into force before this aspect is examined. Monopolies are now covered under the still-to-be-notified sections of the Competition Act. “In this respect, there is a legal vacuum now”, said an expert in competition law.

The Commission, which is not empowered to issue ‘cease and desist’ orders on monopolistic trade practices, would forward the report to the government for action. However, prior to that, it is likely to examine a petition filed before it by a Gujarat-based NGO against the two carriers and the civil aviation ministry, in the light of the DG’s findings.

The DGIR’s go-ahead comes not just from a ‘soft legal terrain’, but also from the growing competition in the civil aviation industry and the declining market share of individual companies, which do not justify any sort of government intervention. The office of the DGIR has examined the deal in the light of the dynamics in the sector and has concluded that there is enough competition in the industry which is now pulling air fare down.

The entry of a number of new carriers like SpiceJet, Kingfisher and Air Deccan has ensured healthy competition in the sector and hence, consumers’ interest will not be hurt by any softening in competition due to the Jet-Sahara merger. The trends in a sector is crucial to the Commission’s decision making.

The DGIR probed the deal after the Prime Minister’s Office intervened in the wake of reports as well as accusations that the merger could lead to a monopoly by Jet Airways. The PMO took up the issue after BJP MP Uday Singh urged that the Commission should look into the deal.

The civil aviation ministry, on its part, has already cleared transfer of airport infrastructure in case of a merger or takeover. Since airlines do not own airport infrastructure, transfer of such assets from one airline to another was under question.

The DGCA has already received the policy instructions from the ministry and a decision on the specifics of the Jet-Sahara case is expected soon.

5 Jun, 2006, 06.45PM IST,PTI

Govt clears four Jet officials name to join Air SaharaNEW DELHI: In a major step forward in the 500 mn acquisition deal, the home ministry has given security clearance to four Jet Airways officials to join the Board of Air Sahara as directors.The clearance would enable the Jet officials to formally become part of the airline their company has acquired, paving the way for the long-drawn acquisition process to go through.Official sources said the members of Jet Airways Board, who were security cleared, are Saroj Dutta, Vijay Kelkar, Javed Akhtar and Victoriano P Dunca. They can now become full-time members of the Air Sahara Board once the DGCA clears their names.Following the acquisition, Air Sahara had applied for grant of several clearances, including security clearances to these members, to the directorate general of civil aviation.The file was forwarded by the civil aviation ministry to the Union Home Ministry for security clearance, which was granted last week, the sources said.On receipt of the Home Ministry clearance, the Civil Aviation Ministry has now sent the file back to the DGCA for further approvals, they said.

Jet Airways is likely to operate Air Sahara as a wholly-owned subsidiary till some other regulatory clearances are granted to the acquisition process.While the name of this subsidiary has been finalised, it will be announced only after all necessary approvals are received from regulatory bodies, including the DGCA.The Monopolies and Restrictive Trade Practices Commission, which is likely to clear the mega aviation deal, has listed the Jet-Sahara case for a final decision in July

6 Jun, 2006, 12.17AM IST,TNN

Jet, Sahara merger inches forwardNEW DELHI: The merger of Air Sahara with Jet Airways moved a step forward on Monday, with the government clearing the appointment of four Jet nominees on the board of the Sahara Group airline.

However, confusion has arisen over the likely structure of the revamped Air Sahara board, since security clearance for Jet chief Naresh Goyal has not materialised so far.

The home ministry’s approval clears the way for the appointment of Saroj Dutta, Vijay Kelkar, Javed Akhtar and Victoriano P Dunca as members on the board of Air Sahara, sources said. While Mr Dutta is the executive director of Jet, the other three are directors on the airline’s board.

After the ministry cleared the names of these four directors, the civil aviation ministry has written to the Directorate General of Civil Aviation (DGCA) about the approval. The DGCA can now authorise appointment of these four on the Air Sahara board, the sources said.

The Sahara Group airline had filed an application with the DGCA to authorise appointment of these four on its revamped board which is supposed to be headed by Mr Goyal.

Jet is running Air Sahara as a subsidiary, deputing a team of its officers as ‘consultants’ to man the day-to-day operations of the Sahara Group airline.

The airline will be run as a subsidiary till all regulatory clearances are obtained. The lack of clearance for Mr Goyal to join the Air Sahara board has led to confusion as he is already chairman of Jet Airways.

The question that is being asked in civil aviation circles is: How can a person who is already chairman of one airline be ineligible for becoming chairman of another airline?

It seems the security clearance for Mr Goyal has not got linked to the clarification that India has to provide to the US authorities over the credentials of Jet. Following a complaint from a US-based entity, the American government has asked India to provide answers to a number of questions on the background of Jet and its promoter.

The Rs.2,300-crore deal of Jet to take over Sahara, the largest so far in the Indian aviation sector, has obtained a number of approvals including clearance from the ministry of company affairs.

Approval from the Monopolies and Restrictive Trade Practices Commission (MRTPC) is expected next month while the civil aviation ministry has said that transfer of airport infrastructure of one airline to another is allowed, subject to certain conditions

21 Jun, 2006, 12.47AM IST, Girish Kuber,TNN

Jet-Sahara flight caught in Cong-SP crossfire?MUMBAI: Could the Sahara group’s proximity to the Samajwadi Party (SP) have anything to do with the problems the airline is facing in consummating its deal with Jet?

“Sahara is more or less a part of the SP ‘Parivar’ which is at loggerheads with the Congress. The Jet-Sahara deal has taken place at a time when the Congress-SP relationship was at its lowest,” a Congress veteran told ET.

He said that the Sahara group is in deep financial trouble and this deal with Jet would have bailed the group out. “Why should we help a party directly or indirectly which is trying to pull the rug from under our feet?” he asked.

Recently, SP chief Mulayam Singh discussed the possibility of reviving the Third Front to offer an alternative to the Congress. On the other hand the Congress gave a call to oust the SP regime in the forthcoming assembly elections.

ET tried to contact Amar Singh to get his comments over the issue. He, however, was incommunicado as he is travelling abroad. When asked whether he too is camping in London along with Jet’s top brass, his office couldn’t confirm or deny. “We don’t know where he is,” was the answer.

A section of the political class believes that the security clearance could be an excuse since Jet itself is not interested in seeing the deal through. “They might have realised later that Sahara could be a liability,” said a Congress leader. “There doesn’t seem to be any logic.

The government has allowed Mr Goyal to set up an airline and now how can his presence on the air lines’ board can be a security concern?” another Congressman asked. “There is much more to it than meets the eye,” he said.

21 Jun, 2006, 12.40PM IST,TNN

'Jet-Sahara deal overvalued'NEW DELHI: Jet sources said on Tuesday that Sahara has already leased its aircraft to them which could be held back unless Sahara returns the advance of Rs 500 crore and Rs 80 crore spent on capital expenditure.

Sahara sources told that Jet’s delay in honouring the deal was in ‘‘ bad faith’ ’ as four of its nominees to the Sahara board have already been cleared by government. But Goyal’s clearance is awaited. Sahara sources said: ‘‘ Four directors are enough to take charge of the airline and run it. Goyal can join the board as and when his clearance comes.’’

Jet sources, however, maintained that it made no sense for them to acquire the airline unless its chairman, Goyal, was part of the board. The sources also said that the deal was overvalued as Sahara was incurring heavy operational losses. This perception is also shared by many within the aviation industry. On June 10, Goyal had expressed his ‘‘ genuine and strong concerns over a number of issues relating to operations of Air Sahara’ ’ in a letter to Sahara chief Subrata Roy.

Goyal’s contention is, however, contested by Sahara sources who said Jet did not walk into the deal blindfold. They said that Jet agreed on the price on the basis of a due diligence done by Ernst & Young. They even complained that Jet had not responded to Sahara management’s repeated attempts to meet and sort out the issues, but instead leaked Goyal’s letter to the media.

As ties between the two prospective partners reach a flash point, the government looks to be distancing itself from the tussle. Civil aviation minister Praful Patel — who had earlier welcomed the deal as being ‘‘ good for the Indian aviation sector’ ’ — on Tuesday said, ‘‘ It’s a deal between two corporate entities and the ministry will not get involved.’’

Sahara sources maintained that Goyal’s clearance was not a stumbling block to the deal as the government had in-principle approved the deal by clearing four of Jet’s directors . Officially, Jet Airways refused to comment on the developments.

22 Jun, 2006, 02.08AM IST,TNN

Deal off: Jet, Sahara now land in courtMUMBAI: The Jet Airways-Air Sahara story spun out of control on Wednesday with the Lucknow-based airline furiously accusing Jet of “malafide intentions” and signalling a messy legal war that will have implications both within and outside the airline industry.

Notices of termination of the agreement as well as the escrow account are expected to be issued on Thursday.

The cancellation of the Rs 2,300-crore deal by Jet may have helped its share price and saved it from a

troublesome acquisition, but it has opened a Pandora’s Box for the companies and the industry.

At stake are various issues such as Sahara’s future as an airline, Jet’s image as a deal maker, the reputation of the airline industry as a stable one and of course, the Rs 1,500 crore that is lying in an escrow account which both airlines will try their best to secure.

This was the money transferred by Jet after the deal was agreed upon earlier this year. Air Sahara has already moved a local court in Lucknow and secured a direction restraining Jet from operating the account. The next hearing is on June 23.

Air Sahara sources also said they will sue Jet for damages for a ‘substantial amount’. “The names of four directors were approved and the deal could have gone ahead if they wanted,” said a source close to Air Sahara. “Naresh Goyal’s decision to back off from the deal, which was approved by his entire board, has come as a shock,’’ they said.

The airline is also in possession of Rs 500 crore paid as cash-advance against the transaction. Jet had pumped in an additional Rs 100 crore into Air Sahara, which has been spent on the day to day running of the airline in the past three months.

Even if this issue is resolved, other major problems remain. Jet’s image as a deal maker has taken a beating, thanks to its 11th hour walkout. “Who will believe Jet now? How many people will do a deal with the company?” asked a leading private equity investor.

Jet’s reason that it had to call it off due to the absence of security clearances from the government has not gone down well, with many people openly saying that Naresh Goyal’s airline wanted to wriggle out of the deal. The biggest issue of course is Sahara’s future as an airline.

Declining market share, shortage of trained pilots and bereft of cash, Subroto Roy Sahara’s pet project could not be in a worse shape

22 Jun, 2006, 02.35AM IST, Girish Kuber,TNN

Jet-Sahara deal caught in political crossfireMUMBAI: The Jet Airways-Air Sahara deal, while ostensibly a commercial one, has always had strong political undertones because of the Sahara Group’s perceived closeness to UP CM Mulayam Singh Yadav and his close aide Amar Singh. The ruling Congress, sources say, may not be all that unhappy about the deal falling through.

According to a senior Congress minister in the Manmohan Singh cabinet, the party was never in favour of the Rs 2,300-crore deal that would have provided crucial financial support to the Sahara group. “Helping Sahara is like strengthening our enemy just ahead of the crucial battle in Uttar Pradesh,” he said.

The largest state in the country is expected to go to polls in a few mo nths from now. The state assembly polls in UP are likely to see the end of the Congress-SP alliance at the state level which has been floundering for a while. Both the parties are trying to cut into each others’ base for political supremacy.

A large section of Congressmen argued against strengthening Sahara. “We should not be helping this group,” a section of this disgruntled Congressmen said. “Their opinion seems to have weighed in the government’s final decision,” this minister said.

Congressmen hope that Jet Airways chief Mr Goyal will “reciprocate” the party for helping him “wriggle” out of a deal that’s gone sour. “Mr Goyal will be thankful to the Congress as it is becoming increasingly clear that Sahara was over-valued,” another minister said, who claims to have advised Mr Goyal even before he signed a pact with Sahara.

On the other hand, civil aviation minister Praful Patel, who belongs to NCP, tried to wash his hands of the entire controversy. “My ministry has nothing to do with this issue,” he told ET on Wednesday.

According to him, this is a tussle between two private companies in which the government has no role to play. “None of them has approached my ministry or me directly or indirectly. So where is the question of me intervening in the matter?” he asked.

23 Jun, 2006, 04.20PM IST,PTI

Jet-Sahara case adjourned till Jun 30LUCKNOW: Arguments of Jet Airways and Air Sahara on the failed acquisition deal remained inconclusive on Friday at the District Court, which fixed June 30 as the next date of hearing.

Directing that the interim order freezing the escrow account will continue till further orders, District and Sessions Judge Shiv Charan Sharma said that if needed, the matter could be heard on July 1 also

24 Jun, 2006, 02.50AM IST,TNN

Jet-Sahara legal tussle sets up a clash of titansNEW DELHI: After burning their fingers with the failed Rs 2,300-crore takeover deal, Jet Airways and Air Sahara are blowing up millions on a battery of high-profile lawyers to fight out the bitter dispute..

While the Sahara Group has lined up heavyweights like K K Venugopal, Fali S Nariman and Dushyant Dave, Jet’s case is being handled by Abhishek Singhvi and Harish Salve.

Most legal eagles specialising in corporate law charge lakhs of rupees for each appearance and legal expenses could burn a mini hole in the pockets of Naresh Goyal and Subrata Roy. For consultancy assignments, the cost goes up hour by hour. Both sides for sure would feel the additional pinch of legal expenses.

24 Jun, 2006, 01.50AM IST,TNN

Jet-Sahara dogfight hits the party circuitNEW DELHI: The Jet-Sahara tussle intensified further on Friday with the freeze on the Rs 1,500-crore escrow account established for the deal getting extended “till further (court) orders”, while the failed deal got more politicised with the BJP and former civil aviation minister Sharad Yadav hitting out at the security clearance granted to Jet Airways chairman Naresh Goyal.

On its part, the Sahara Group alleged that Jet Airways backed out of the deal due to cash crunch and the real reason for the break-up was not the lack of security clearance to Mr Goyal before the deadline set for the government approvals.

Seeking to lift the freeze on the escrow account, Jet Airways challenged the jurisdiction of the Lucknow sessions court in freezing the account which is being maintained by ICICI Bank. The airline’s counsel Abhishek Singhvi questioned the maintainability of the petition filed by Air Sahara, saying that the case should be heard by the Bombay High Court.

Jet had filed a petition before the high court on June 20 and the sessions court had no jurisdiction to hear the matter, he said. Senior advocate Dushyant Dave, appearing for Sahara, countered the argument by saying that the Bombay High Court has not yet taken cognisance of Jet’s petition.

After hearing both sides, district and sessions judge Shiv Charan Sharma fixed June 30 as the next date for hearing. The freeze on the escrow account would continue till further orders, he said. The court had, on Wednesday, passed an interim order, restraining Jet from withdrawing money from the escrow account.

Meanwhile, Jet informed the Bombay Stock Exchange that a petition had been filed — under Section 9 of the Arbitration and Conciliation Act, 1996, — against Sahara India Commercial Corporation (SICCL). The exchange was also informed about the case filed by SICCL at the Lucknow sessions court.

The Lucknow sessions court has said that the Jet-Sahara matter would be heard on July 1, too, if necessary. Jet had set up the Rs 1,500-crore escrow account to release funds to the Sahara Group once the proposed

purchase of Air Sahara is completed. Mr Singhvi also challenged the impleading of ICICI bank in the petition along with Jet, contending that the bank was not party to the failed Rs 2,300-crore deal.

28 Jun, 2006, 09.40PM IST,PTI

Legal battle intensifies over Jet-Sahara disputeNEW DELHI: The legal battle over the collapse of the Rs 2,300 crore deal to acquire Air Sahara by the Jet Airways on Wednesday intensified with the latter moving the Supreme Court for a stay on the operation of Lucknow district court order, freezing the escrow account and restraining it from selling Air Sahara shares pledged to it for an advance of Rs 500 crore.

Questioning the jurisdiction of the Lucknow Court in hearing the application moved by Sahara and passing an interim order, Jet filed a petition in the apex court seeking transfer of the proceedings to the Bombay High Court where it had already instituted proceedings under the Arbitration Act.

Terming the injunction order passed by the Lucknow District Court as "mala fide" and "abuse of process of the court", Jet said the order has caused serious and grave miscarriage of justice and it would continue to suffer irreparable harm, loss and prejudice if the proceedings were not transferred from Lucknow to Bombay High Court.

The development comes hours after a caveat filed by the Sahara group company to prevent any ex-parte hearing or order on the Jet petition.

In its transfer petition, Jet Airways requested the apex court to stay the operations of the interim orders passed on June 21 and 23 by Lucknow District Judge on the Escrow Account (opened by Jet for the Rs 2,300 crore deal) and restraining the sale of shares pledged by Air Sahara for Rs 500 crore.

The Jet petition was likely to come up for hearing before June 30 when the Lucknow District Court is scheduled to hear the Sahara plea.

Giving details of the Share Purchase Agreement (SPA) entered by it with Air Sahara for the acquisition deal, to be executed by June 21, Jet Airways contended that the Lucknow court did not have any jurisdiction to deal with the arbitration matter as the petitioner had already moved the Bombay High Court, the seat of arbitration mentioned in SPA.

29 Jun, 2006, 02.58AM IST,TNN

'Govt not to be blamed for Jet-Sahara deal failure' ‘NEW DELHI: The government is not to be blamed for failure of the Rs.2,300-crore deal by Jet Airways to take over Air Sahara, civil aviation minister Praful Patel emphasised on Wednesday. The merger and acquisition (M&A) policy for the civil aviation sector was not tailor-made to suit any airline but based on the best international practices, he said while speaking to mediapersons here.

The remarks have to be seen in the backdrop of allegations that delay in security clearance for Jet Airways chairman Naresh Goyal gave the airline an excuse to wriggle out of the deal with the Sahara Group. The M&A policy on airlines was also a subject of debate since Jet was keen to take over landing slots, parking bays and hangars of Air Sahara.

"The policy cannot be tailor-made to suit any particular airline. The government is very clear on this issue. The policy that is broadly in place is based on best international models and practices," Patel said. The comment comes close on the heels of a statement issued by Jet on Tuesday, saying that

the deal did not work out since all clearances were not available before the deadline.

"If someone had any grievances, they are free to approach the government for clarifications. But the government is not answerable to anyone," Patel said. "Policies are not made to suit any particular airline. If someone is dissatisfied, we cannot be held responsible," he emphasised. The civil aviation minister added that policies were made for the entire aviation sector.

Jet Airways had said that though reform and liberalisation in the aviation sector had been fast-paced, "the policy changes in such key sectors have their own time frame." "Commercial transactions, however, have their own time frame based on financial and other techno-commercial compulsions. On account of this, the time limits in the Share Purchase Agreement (between Jet and Air Sahara) have expired before the conditions precedent have been met," the airline had said in its first detailed statement after the deal failed.

Last month, the civil aviation ministry had last month finalised the policy to be followed regarding the use of airport infrastructure in case of mergers or takeovers of airlines and sale or transfer of aircraft. The Aircraft Acquisition Committee of the ministry had considered the matter and recommended that only the user rights over such infrastructure which were given to an airline on non-payment basis, like parking bays and landing slots, could be allowed to be used by the airline that takes over the aircraft.

"The user rights would be available with the airline that takes over the aircraft only till such time that the infrastructure concerned is under actual use," the committee had emphasised.

The Naresh Goyal-owned airline followed up the minister’s comment with another statement to clarify its position. "Jet Airways maintains that there is no question of any blame. 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 recognised commercial consideration and is generally dealt with in large commercial deals. The deal was based on some assumptions – which were in turn made conditions precedent. Since they did not materialise, the deal lapsed. In such a situation, there is no occasion to "blame" anyone or any agency," the statement said.

2 Jul, 2006, 10.30AM IST,PTI

Difficult for Jet Airways to prove case: ExpertsNEW 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," said senior Supreme Court lawyer Lalit Bhasin..

Bhasin, who specialises in corporate affairs, said 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 may apply only if both parties were held responsible for the deal's failure. But as both were blaming each other for 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 complain it did not know 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 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.

TT 07020939 DEL "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 told PTI.

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.

"On the other hand 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 may not be a violation.

"So far neither of them has said they are against arbitrat ion. 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."

3 Jul, 2006, 01.51AM IST, Cuckoo Paul,TNN

Jet-Sahara legal tussle’s set to escalateMUMBAI: Even as it still remains unclear why Jet Airways chairman Naresh Goyal pulled out of the deal to buy out Air Sahara at the last minute, Mr Goyal is now straining every sinew to get Sahara to refund Rs 500 crore in guarantee money, which Jet had paid into an escrow account with ICICI Bank.

On Friday, Mr Goyal had taken the legal sabre-rattling with Sahara chief Subrata Roy a few notches higher by filing a petition with the Bombay High Court, holding Mr Roy personally liable for refunding Rs 500 crore by July 4.

According to the Jet petition, a copy of which is available with ET, Mr Roy had stood as a personal guarantor to the deal. Sahara was to refund Rs 500 crore paid as guarantee money within seven days of the termination of the agreement. The Jet petition also attaches copies of the share purchase agreement (SPA) that Jet and Sahara had entered into at the time of the deal.

The petition also attempts to throw a little more light on the circumstances leading up to the termination of the agreement. Apparently, Sahara India Commercial Corporation (SICCL), the Sahara group company which is the prime shareholder of Sahara Airlines, had made a last ditch effort to secure an extension of the share purchase agreement with Jet Airways on June 19, just two days before the agreement lapsed.

SICCL had written to Jet Airways requesting an extension of 15 days for the conditions for purchase to be fulfilled. However, the plea was turned down by Jet Airways. In a letter, Saroj Dutta, executive director, Jet Airways had said, “In the light of disturbing facts that have recently come to light, we are not in a position to agree to any extension.” The share purchase agreement lapsed on June 21 and the deal eventually collapsed. But so far, no further details are available in the public domain on the so-called “disturbing facts” which prompted Jet to get out of the deal.

Just how Subrata Roy is likely to respond to Jet’s latest offensive isn’t yet clear. But sources close to Sahara say that their legal position continues to remain the same: that Jet’s intentions were malafide and they deliberately chose not to go ahead with the deal. This is likely to form the backbone of their legal strategy.Legal experts in Mumbai say there is a lot more legal warring to come.

So far, the legal tussle has been about which court should have the jurisdiction over the arbitration proceedings.

Sahara has pushed for the case to be heard at the Lucknow district court, while Jet has filed an earlier petition arguing that the Bombay High Court’s jurisdiction would prevail.

Surprisingly, both sides are yet to either name an arbitrator or file a claim for damages. Both these are standard measures under the Arbitration Act and among the first moves by warring groups. However, if the case does go into arbitration, Jet may have to wait a while before it can recover the money in the escrow account.

Said Hiroo Advani, partner, Advani & Co, a leading arbitration lawyer, “Jet Airways’ actions are inexplicable as the airline had tied up Rs 2,300 crore and also has no control on Sahara’s assets. The arbitration proceedings in India often drag on for several years and the airline’s liquidity will be squeezed till a settlement is reached.”

However, Jet Airways remains optimistic on the progress of the case. With a battery of lawyers led by Harish Salve, and Iqbal Chagla and Arun Jaitley on the retainer list, the airline is so far sticking to its stand that the conditions precedent to the deal was not met.

Speaking to ET, Saroj Dutta said that the escrow was subject to the deal going through. However, with the deal falling through the money should revert to Jet Airways. He also said Jet was having no liquidity problems

14 Jul, 2006, 11.50AM IST,PTI

SC stays hearings in Jet-Sahara caseNEW DELHI: Supreme Court on Friday stayed proceedings on petitions filed by Jet Airways and Air Sahara against each other at Bombay and Lucknow courts.

A three-judge Bench headed by Chief Justice Y K Sabharwal also issued notice to Air Sahara on Jet's petition to transfer all suits filed by it in Lucknow to Bombay High Court. The apex court directed Air Sahara to file its reply within two weeks and asked Jet Airways to file its rejoinder in one week after the reply was submitted.

The court listed the hearing on the matter after three weeks.

The Bench also directed that the interim order of the Lucknow district court to freeze the escrow account would continue till further orders

15 Jul, 2006, 01.18AM IST,TNN

SC stays Jet-Sahara litigation in HC, Lucknow courtNEW DELHI: The legal battle between Jet Airways and the Sahara Group over the failed Rs 2,300-crore Air Sahara deal took a new turn on Friday with the Supreme Court staying proceedings on petitions filed by the two parties against each other in Mumbai and Lucknow courts.

The court also issued a notice to Sahara, seeking response on Jet’s petition for transferring the case filed by the Group in the Lucknow sessions court. A three-judge bench of the apex court, headed by chief justice YK Sabharwal, allowed two weeks for Sahara to file its affidavits.

After this, Jet will get one week to file its counter affidavit. Therefore, hearing in the Supreme Court is likely to resume after three weeks. Till then, the Rs 1,500-crore escrow account established to complete the mega deal will stay frozen.

A stay will remain in place on Jet’s demand for return of the Rs 500 crore advance paid to Sahara for the Air Sahara acquisition. The bench, which includes justices CK Thakker and RV Ravindran, said the interim order of the Lucknow district court to freeze the escrow account opened for the acquisition will continue till further orders.

In January, Jet had agreed to buy Air Sahara for $500m and the airline’s operations were taken over by a team of Jet’s top executives. However, the deal collapsed in June due to the absence of regulatory approvals, including security clearance for Jet chief Naresh Goyal to join Air Sahara’s board.

Even before the expiry of the June 21-midnight deadline for completing the share purchase agreement, Air Sahara moved a Lucknow court seeking to stop Jet from operating the escrow account opened for the purpose.

The account has been set up with ICICI Bank.

In the meanwhile, Jet filed a petition in Bombay HC seeking to launch arbitration to resolve the dispute. Industry sources said Jet has already lost nearly Rs 200 crore infused to run Air Sahara and freezing of the escrow account would impose further strain on the company’s finances.

On its part, Sahara has lost significantly in terms of valuation. Any deal to sell the airline now would be a distress sale and valuation would be only a fraction of the $500m that Jet had agreed to pay, the sources said. Air Sahara’s market share has slid to 8% and shares of airline companies are facing turbulence.

After the collapse of Jet-Sahara agreement merge into a single entity, Jet had filed a petition before the Bombay High Court for a direction to refer the dispute for arbitration. Sahara, meanwhile, filed a petition in a Lucknow court, which restrained Jet from withdrawing the money deposited in the escrow account.

Challenging this order, Jet pleaded before the Supreme Court for clubbing together all the petitions relating to the deal in the Bombay HC and also for vacating the Lucknow court’s order

21 Jul, 2006, 03.00PM IST,PTI

MRTPC assails Jet, Sahara for deal failureNEW DELHI: Taking strong objection to Jet and Sahara not informing it of the failure of their proposed merger, the Monopolies and Restrictive Trade Practices Commission has directed its investigative arm to file an updated report on the current situation.

MRTPC, looking into issues of cartelisation of the Indian aviation sector through the proposed merger, flayed both the airlines for failure to inform it of the failed deal.

"It would be appropriate if Director General of Investigation and Registration (DGIR) updates its investigation report," MRTPC acting Chairman M L K Sardana said.

The Commission also observed that both the parties were engaged in litigation in various courts, including the Apex court.

MRTPC listed for September another petition, filed by Ahmedabad-based Consumer Education and Research Society, that had questioned the proposed merger.

MRTPC had taken cognizance of the deal after the Prime Minister's Office intervened in the matter on a complaint of BJP MP Uday Singh who demanded a probe into the merger.

Its investigating arm had, however, given a go-ahead to the deal after finding nothing wrong in it. It had not found violation of any provision of the MRTPC Act in the deal.

Jet had proposed to acquire Sahara in January this year. The announcement created factions among sections of the industry on apprehensions that it could lead to a monopolisation of Indian skies as Jet enjoyed a dominant position in the aviation sector, which could further go up after the merger with Sahara.

But after the failure of the deal in June, both the airlines are engaged in a courtroom battle.

1 Aug, 2006, 12.06AM IST,TNN

Jet, Sahara appoint former judges as star arbitratorsMUMBAI: Jet Airways and Air Sahara have taken their legal battle a step further by naming eminent retired judges as arbitrators to take their case forward in the courts.

While Jet has named Justice SP Bharucha, the former chief justice of India, Sahara has brought in Justice BP Jeevan Reddy, also a Supreme Court judge. Appointment of arbitrators under the Arbitration Act is a standard process for warring corporate groups and observers of the Jet-Sahara proceedings are surprised that it has taken so long in this case.

Both airlines already have a battery of lawyers arguing their case. Jet Airways had taken the legal sabre-rattling with Sahara chief Subrata Roy a few notches higher by filing a petition with the Bombay High Court, holding Mr Roy personally liable for refunding Rs 500 crore by July 4.

So far, the legal tussle has been about which court should have the jurisdiction over the arbitration proceedings. Sahara has pushed for the case to be heard at the Lucknow district court, while Jet has filed an earlier petition arguing that the Bombay High Court’s jurisdiction would prevail.

Jet’s battery of lawyers is led by Harish Salve with Iqbal Chagla and Arun Jaitley on the retainer list. The airline has stuck to its stand that the conditions precedent to the deal was not met. Sources close to the developments say the issue has now become a matter of prestige for both the parties involved and neither is in the mood for an out-of-court resolution.

Both judges have been active in various legal developments in recent years. Justice BP Jeevan Reddy, earlier the chief Justice of the Allahabad High Court, retired in 1997.

He was most recently in the news as chief of the five-member panel appointed by the government to review the India’s Armed Forces Special Powers Act.

15 Aug, 2006, 01.36AM IST,TNN

Jet, Sahara deal may yet take off

MUMBAI: After the bitter public falling out in June, Jet Airways and Air Sahara are now taking initial steps towards reviving the buyout deal that was originally signed between the two in January this year. A settlement could result in Jet acquiring the Lucknow-based airline, but sources close to developments said negotiations are still at a very preliminary stage.

Sources from both airlines, who did not wish to be identified, said there is a realisation that the current state of affairs is harming the interests of both parties. They are now reported to be working out the contours of an agreement so that Jet Airways can go ahead with the acquisition. The primary issue being discussed is the financial implication of such a revival. The sources said a top level meeting was held on Sunday to explore the possibility.

When contacted by ET, both sides refused to comment on the negotiations. Jet Airways’ executive director Saroj Dutta said, “There is nothing to say on the issue.” The Sahara group spokesperson said that there is nothing substantial yet.

However, sources close to developments said the channels of communication were never closed and emissaries from both sides have been talking to each other. Jet Airways is being represented by TNV Iyer, who was earlier on the board of the airline and knows both Jet Airways chairman Naresh Goyal and Air Sahara chief Subrata Roy well, and the airline’s auditor, Rajesh Chaturvedi. Air Sahara is

represented by its auditors Ernst & Young, who were the advisors to the deal.

At stake for Jet Airways, is the roughly Rs 2,500 crore that is stuck in the form of an escrow account and a cash payout to the Sahara group. The company is currently in the middle of an aggressive expansion plan and has planned a capex of $450m this year to fund its aircraft induction.

The clash of egos of the promoters, after the very public breakdown of the Rs 2,220 crore deal, is reported to be another major issue that impedes an immediate settlement. Jet Airways had virtually taken over the operations of Air Sahara for about three months and then walked out of the deal on June 21, saying the ‘conditions precedent were not met.’

Both airlines subsequently went to court and have since appointed high profile judges as arbitrators. The case is scheduled for hearing next month to decide the jurisdiction of the hearing.

Jet Airways has reported its first quarterly loss after its high profile IPO last year. For the quarter ended 30 June, ’06, the airline reported a net loss of Rs 44.98 crore against a net profit of Rs 95.34 crore for the corresponding quarter of previous year. Jet Airways shares closed about 4% higher at Rs 543.

29 Aug, 2006, 02.38AM IST,TNN

SC says Bombay HC will hear all Jet-Sahara casesNEW DELHI: The Supreme Court on Monday directed that all disputes arising out of the failed Rs 2,300-crore Jet-Sahara deal will be heard by the Bombay High Court. However, the apex court did not vacate the stay on the escrow account and the Rs 500 crore advance paid by Jet for the purpose.

A bench headed by Chief Justice YK Sabharwal asked the Bombay High Court to expeditiously decide the issue of jurisdiction. The HC said the injunction granted by the Lucknow Court will continue till further orders.

While Sahara has asked for Lucknow as the jurisdiction of the matter, Jet says that it should be Mumbai. However, the bench stated that it would be open to respondent Sahara to urge before the Bombay High Court that it lacks inherent jurisdiction.

On the collapse of the deal, Jet and Sahara had approached Bombay High Court and Lucknow Court, respectively, seeking to restrain each other from withdrawing money deposited in the escrow account

9 Oct, 2006, 01.20PM IST,PTI

Arbitration tribunal begins Jet-Sahara case hearingMUMBAI: An arbitration tribunal on Monday began hearing the Jet-Sahara case pertaining to a collapsed take-over deal.

The three-member tribunal consists of retired Supreme Court chief justices S P Bharucha, Jeevan Reddy and Lord Stein.

"The tribunal starts hearing the case today. It will submit its report to the high court once the hearing is complete. And the high court will give the final verdict on the case," Jet Airways lawyer Janak Dwarkadas told media here.

The Bombay High Court, on September 22, allowed Jet to withdraw Rs 1,500 crore, deposited in an escrow account opened for the purpose of acquiring Air Sahara, against a bank guarantee of the same amount.

The court also ruled that the interim judgement was subject to the tribunal's decision, which will hear

the case from the second week of October.

In January this year, Jet Airways signed an agreement to acquire 100 per cent equity stake in Air Sahara. As part of the deal, Jet paid Rs 180 crore for the revival of Air Sahara and Rs 500 crore for Air Sahara shares, besides depositing Rs 1,500 crore in the escrow account opened for the purpose.

After the deal fell through - following Jet's failure to get regulatory clearances by the deadline of June 21 - Sahara moved a court in Lucknow seeking to bar Jet from operating the escrow account.

Meanwhile Jet filed two separate petitions before the Bombay High Court.

The Supreme Court had in August transferred two petitions filed by Sahara in a Lucknow court to the Bombay High Court for hearing.

5 Feb, 2007, 03.01AM IST,TNN

Jet, Sahara want to keep ground handling workNEW DELHI: The government’s new ground handling policy has left the airline industry divided. While established full-service carriers Jet Airways and Air Sahara, are keen to manage ground handling on their own, low-cost carriers are in favour of outsourcing and want adequate competition among service providers to keep their costs down. Jet has close to 5,000 employees involved in various ground handling activities while Air Sahara has around 2,300 people on their rolls.

The government’s new policy comes into effect from January 1, 2009, at six major airports — Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad. As per the new policy, there will be three ground handlers at each airport — the airport operator or its subsidiary, a subsidiary of Air India and Indian and a ground handler selected through competitive bidding process.

Both Jet Airways and Air Sahara on Friday requested the Ministry of Civil Aviation to allow them to handle their own ground operations. If the government sticks to its guns, then Jet and Sahara will have to spin off their ground handling operations into a separate company and bid for the third slot. If unsuccessful, they may have to lay off people.

Jet Airways said in a statement that ground handling, both in the terminal and at the ramp is an integral part of its services. “The airline should be allowed to continue to handle it’s own flights with its own organisation,” Jet Airways CEO Wolfgang Prock-Schauer said.

On a similar note, Air Sahara president Alok Sharma said both the established carriers possessed adequate infrastructure and trained manpower to carry out these services in most major airports. Mr Sharma said that Air Sahara’s ground handling related costs were one of the lowest in the industry.

Most new airlines such as Air Deccan, Kingfisher and SpiceJet have already outsourced a large part of their ground handling activities and feel that the new policy will help to further grow the Rs 1,000-crore ground handling business in the country with proactive private sector participation.

Another discordant note among industry players is that though the two established carriers want the Federation of Indian Airlines, the industry body, to take up this issue with the Government, many low-cost players feel that only those issues that are of common interest to all the members should be taken up by the association.

Reacting to the reservations expressed by some of the players, a senior official of Ministry of Civil Aviation noted that these private carriers should hive off their ground handling departments into separate companies and bid for the business. However, Mr Sharma of Air Sahara is not very enthused with the idea.

28 Feb, 2007, 06.40PM IST,PTI

HC asks Jet, Sahara to move ATMUMBAI: In a setback to Jet Airways, the Bombay High Court on Wednesday asked the airline to approach the arbitration tribunal for resolving the dispute over the bank guarantee given to Air Sahara

for the failed takeover deal. Jet Airways had last year submitted a bank guarantee of Rs 500 crore for a share-purchase agreement (SPA) to acquire Air Sahara, but the deal went sour. The companies had earlier approached an Arbitration Tribunal (AT) in London to resolve the matter related to the failed takeover deal, but the issue of bank guarantee was not included.

Jet had moved the High Court to get the guarantee money back, but a bench of Justice D K Deshmukh today disallowed the petition and asked the carrier to approach the tribunal.

Sahara's counsel Fali Nariman had earlier contended that the guarantee money was incorporated as part of the SPA and should be dealt with by the tribunal.

However, Jet's lawyers Harish Salve and Janak Dwarkadas had opposed the contention, saying the guarantee was distinct from the SPA. They had argued that it was a stand-alone guarantee and a liability to be paid on demand.

Jet had entered into a SPA with Sahara India Commercial Corporation Ltd for Rs 2,300 crores on January 18 last year. The condition precedent to the SPA was acquiring necessary approvals from regulatory authority. But the deal did not go through on account of non-completion of this condition by the deadline of June 21, 2006

5 Apr, 2007, 08.45PM IST,PTI

Court notice to Govt on documents of Jet-Sahara mergerMUMBAI: The Bombay High Court today issued a notice to the government, on a petition filed by Jet Airways asking for documents related to its failed takeover bid of rival Air Sahara.Jet, whose plans to acquire Air Sahara failed due to absence of security clearance, had on Monday filed the petition seeking the documents and notes made by Director General of Civil Aviation and Civil Aviation Ministry on the merger. Jet's application was filed under Section 27 of the Arbitration Act.

The single judge bench of Justice Anoop V Mehta asked the government to present its views on April 11.

According to Janak Dwarkadas, counsel appearing for Jet, these documents are related to the security clearance and internal notes made by the authorities during the merger.

A two member arbitration tribunal, which is hearing the two airlines, had on March 28 granted permission to Jet Airways to file application seeking documents before the court.

The tribunal is hearing Jet's plea seeking refund of Rs 1,500 crore it had deposited in an escrow account in the run up to the merger.

The arbitration tribunal will resume hearing arguments on April 9 -- when final hearing is scheduled to be held non-stop for two weeks.

6 Apr, 2007, 02.43AM IST,PTI

6 Apr, 2007, 02.43AM IST,PTI

Court asks govt to submit papers on Jet-Sahara mergerMUMBAI: Private carrier Jet Airways, whose plans to acquire Air Sahara fell through due to absence of security clearance, on Thursday secured a direction from the Bombay High Court, under which the Centre has to furnish documents related to the merger process.

A single member bench of Justice Anoop V Mehta directed the ministry of civil aviation and the director general of civil aviation to produce documents, including those on security clearance and internal notes, regarding the failed merger of Jet Airways and Air Sahara.

The bench directed the government to present its plea on April 11. Jet had on Monday filed an application under section 27 of the Arbitration Act demanding documents from the ministry and the DGCA. According to Janak Dwarkadas, Jet counsel Jet, these documents are related to the security clearance and internal notes made by the authorities during the merger.

The two member arbitration tribunal had on March 28, granted permission to Jet Airways to file application seeking documents before the court. The tribunal is hearing Jet’s plea seeking refund of Rs 1,500 crore it had deposited in an escrow account in the run up to the merger.

The arbitration tribunal will resume hearing arguments on April 9 — when the final hearing is scheduled to be held non-stop for two weeks

8 Apr, 2007, 03.30PM IST,PTI

Arbitration tribunal set for final hearing in Jet-Sahara caseMUMBAI: Seven months after initiating the arbitration hearing of the Jet-Sahara deal-turned-sour, the tribunal will tomorrow begin the final hearing in the matter, for two weeks on a daily basis.

The three-member tribunal headed by British judge Lord Stein includes retired Supreme Court Chief Justices S P Bharucha arbitrating for Jet Airways and Justice Jeevan Reddy for Air Sahara.

At stake is more than Rs 2,300 crore. In January last year, Jet Airways had signed a share-purchase agreement (SPA) to acquire 100 per cent equity stake in Air Sahara.

As part of the deal, Jet paid Rs 180 crore for revival of Air Sahara and Rs 500 crore for Air Sahara shares, besides depositing Rs 1,500 crore in the escrow account opened for the purpose.

However, the Bombay High Court had allowed Jet Airways to withdraw the Rs 1,500 crore from the escrow account against a bank guarantee of the same amount in September last year.

After the deal fell through - following Jet's failure to get regulatory clearances by the deadline of June 21 last year - both parties moved court and the matter was directed for arbitration.

While arbitration hearings are on from September 9 last year, the panel is now set for final hearing and disposal of the issue. Jet Airways claims that all conditions precedent to the deal were not fulfilled by Air Sahara and it was justified in walking out of the deal.

10 Apr, 2007, 02.50PM IST,INDIATIMES NEWS NETWORK

Jet, Sahara deal on, valued at Rs 18 billionMUMBAI: India's top private airline, Jet Airways Ltd., is again looking to buy Air Sahara after it last year abandoned a $500 million deal to buy its smaller rival, television channels said on Tuesday.

Jet was likely to value privately-owned Air Sahara at 14-15 billion rupees ($325-$350 million), CNBC-TV18 said. NDTV Profit put the valuation at Rupees 18 billion, citing unnamed sources.

A spokeswoman for Jet said she did not have any information on the reports. A spokeswoman for Air Sahara denied the reports.

Jet, which has almost 40 percent of India's fast-expanding domestic market and also flies to some overseas destinations, struck a deal in January 2006 to buy Air Sahara from the Sahara group.

After the deal failed to get regulatory approvals, Jet said last June it had decided not to pursue the acquisition for commercial reasons and in the interest of its shareholders.

10 Apr, 2007, 03.25PM IST,

Jet, Sahara deal on, valued at Rs $350 millionMUMBAI: India's top private airline, Jet Airways Ltd., is again looking to buy Air Sahara after it last year abandoned a $500 million deal to buy its smaller rival, television channels said on Tuesday.

Jet was likely to value privately-owned Air Sahara at 14-15 billion rupees ($325-$350 million), CNBC-TV18 said. NDTV Profit put the valuation at Rupees 18 billion, citing unnamed sources.

A spokeswoman for Jet said she did not have any information on the reports. A spokeswoman for Air Sahara denied the reports.

Jet, which has almost 40 percent of India's fast-expanding domestic market and also flies to some overseas destinations, struck a deal in January 2006 to buy Air Sahara from the Sahara group.

After the deal failed to get regulatory approvals, Jet said last June it had decided not to pursue the acquisition for commercial reasons and in the interest of its shareholders.

11 Apr, 2007, 02.11AM IST, Gireesh Chandra Prasad & Sunny Verma,TNN

Jet-Sahara marriage may clear monopoly litmus testNEW DELHI: Issues related to monopoly and possible abuse of dominance in a big ticket merger may turn out to be non-starters in the resurrected Jet-Sahara deal.

While the competition amendment bill aimed at making the Competition Commission of India (CCI) a functional body is still being finalised, the existing Monopolies and Restrictive Trade Practices (MRTP) Act does not deem monopoly per se as an offence.

In fact, when the government asked the MRTP Commission last year to conduct a probe into the Jet-Sahara merger, the investigation wing of the Commission gave it a clean chit for the same reason. In order to find out if the merged entity abused its monopoly position, its behaviour needs to be observed for some time.

In any case, increasing competition has effected such a change in the market dynamics that the Jet-Sahara combine is not in such a dominant position now. The combined market share of the two companies now works out to just around 32% as compared to 50% when they originally inked the merger deal last year.

If the ministry of company affairs manages to table the proposed bill to amend the Competition Act in the current Parliament session and it gets passed, the Competition Commission will have enough opportunity to look into the merger, officials said.

The Act empowers the expert body to probe any merger within one year of its completion if the combined entity has assets worth Rs 1,000 crore or turnover of Rs 3,000 crore. In case of a group, the Commission can investigate if the merged entity has assets worth Rs 4,000 crore or turnover of Rs 12,300 crore in India.

According to industry sources, the combined asset value of Jet-Sahara could be over Rs 7,000 crore, which indicates that the Commission could examine the merger if it gets functional soon enough.

The combined asset value of the merged entity will be between $1.6 billion and $1.7 billion (or between Rs 7,040 crore and Rs 7,480 crore), with Jet Airways valued at $1.1 billion to $1.2 billion based on its current share price and Air Sahara valued at about $450 million on the basis of acquisition price, according to analysts.

“Scrutiny of any merger between airlines would focus on possible monopoly over airport facilities and routes,” said a senior government official. The Jet-Sahara merger is unlikely to give them any monopoly power over airport facilities or domestic routes except that a duopoly situation may arise in case of international routes.

Jet-Sahara and Air-India and Indian entities shall have exclusive rights over international flights, since currently only these two meet the requirements to fly internationally

12 Apr, 2007, 12.30PM IST, Amit Bhandari & Ranjit Shinde,TNN

Jet-Sahara deal: Low-cost airlines gain mostThe first trading session following the announcement of the Jet-Sahara re-merger saw a sharp spike in stock prices of Air Deccan and SpiceJet. The other airlines are perhaps the biggest gainers from the deal. From their perspective, instead of two large full service carriers, they face only one. Lesser competition would benefit all the players. More important, however, is the fact that the player that remains, Jet, is in a much weaker financial position.

In a business where operators are losing money by the planeload, more aircraft and less cash isn’t a good place to be in. Apart from the direct cash outflow of Rs 950 crore, the additional aircraft will also present a drain on Jet’s operating cash flows. There are a few positives for Jet from the whole transaction — but they are hard to quantify.

First, with the settlement uncertainty behind it, the airline can now move on. It will also get Sahara’s ground infrastructure and crew. Since both the airlines primarily operate Boeing 737s, there could be some rationalisation of flights and crew could be redeployed. Also, there could be a reduction in poaching, since most of the other domestic airlines operate on Airbus. Sahara’s fleet is entirely leased and comprises old aircraft.

The value they bring is access to flight slots in the Mumbai and Delhi airports. Finally, there will be one less player to contend with in the premium end of the market — this could result in some improvement in yields.

13 Apr, 2007, 02.22AM IST,TNN

It’s a win-win deal, says Air Sahara chief NEW DELHI: The Jet-Sahara deal is in the interest of the two airlines, the aviation industry and the consumers, said Air Sahara president Alok Sharma. “It’s a win-win deal for both airlines. The industry was set to see consolidation. An industry that is ill is not in the interest of the nation or the consumer,” he said soon after the Jet-Sahara deal was officially announced.

With two mergers in the works, size would be key for survival in the domestic aviation market, he added. He concedes that size has become an important criteria for success in the aviation sector. “For instance, Air Sahara

needed the size to grow its market share,” he said. Post-merger, Jet and Sahara would have a combined domestic market share of about 33-34%.

“The two mergers — AI-IA and Jet-Sahara — will change the contours of the industry in the coming years,” he added. On issues concerning its 3,700-odd employees, Mr Sharma said that the group will ensure that interests of its employees are taken care of. “Those employees who decide against joining Jet Airways would be accommodated in the Sahara group,” he said.

Discounting any hitch in completing the transaction, he said the government approvals for the deal were already in place. Mr Sharma said apart from Air Sahara’s flying rights and parking slots, Jet would also get to use the 10 Boeing 737 aircraft for which Sahara had placed orders. The Sahara group would retain the brand Air Sahara, he added.

18 Apr, 2007, 12.19AM IST,

Jet-Sahara deal, unwanted monopoly?Balance consolidation with competition

Consolidation of the Indian airline industry is necessary and inevitable. The financial realities of the airlines are getting more and more visible and the industry still is struggling in the absence of pricing power.

The continued impact of the capacity growth will defer the resumption of rational pricing in the market and drive the yields to painfully low levels. This is in spite of the underlying fundamentals that drive demand remaining very strong.

Jet’s acquisition of Sahara will pose significant challenges for Jet and may close some structural opportunities, and the risks on the downside may have increased in the short term. I expect Jet to place all its efforts to turnaround Air Sahara as quickly as possible but this acquisition will mean that Jet has no room for error.

However, Jet’s decision to operate Air Sahara as a separate entity in the budget category will mean more competition in the LCC segment and push the case for further consolidation. This will also mean Indian aviation moving to a different and new industry structure.

Indian airlines need to stabilise and we need fares in the market that reflect cost structure to achieve this objective. Consolidation may help the airlines to bridge the gap between cost and revenue and the shift in market power to few stronger players will help the industry to restore market discipline.

The most crucial issue facing the aviation sector in India is the viability of the domestic airlines. Airline development leads to airport and tourism development. We need to have airlines operating with a sufficient margin and this is vital for the overall health of the air transport industry in India.

Government has to play a critical role to ensure that while consolidation may be encouraged, whether through mergers or liquidations, the consumer’s interests are protected by ensuring that tangible competition exists in the market.

We have to find a right balance between the needs of the consumer and of the airlines. I believe consumers will benefit from profitable and healthy airlines which also results in a stable air transportation system. More important, we need an aviation policy (long overdue) that is guided by sound principles and national interest.

21 Apr, 2007, 11.00AM IST,IANS

Jet-Sahara deal: heralding new phaseIndia's leading private airline Jet Airways finally announced a takeover of the much smaller Air Sahara at a cost of Rs 1450 crore ($346 million) last week, ending prolonged speculation over the deal which had been announced originally in January 2006. With this merger, the process of consolidation has begun in the country's civil aviation industry. It will emerge as the largest player in the Indian skies.

The private sector Jet-Sahara combine will end the dominating role of the public sector with the new

corporate commanding as much as 32 percent of the domestic market space. The scene may change after a few years with the proposed merger of Air India and Indian Airlines, but Jet-Sahara will be the leader for some time to come.

The merger is not likely to impact domestic fares for the time being, in view of the stiff competition between the numerous players in the civil aviation sector. This is despite the fact that Jet-Sahara along with the public sector Indian Airlines will hold a commanding 55 percent of market share. Besides Jet Airways has now decided to transform Air Sahara into a low cost carrier, to be known as Jetlite though officially maintaining that it will be positioned somewhere between a low cost carrier and a normal one.

The merger of the two airlines will give Jet Airways access to the entire leased fleet of about 27 aircraft of Air Sahara as well as to the infrastructure and logistics of the smaller airline. It will also give Jet a pan-India presence as Sahara is operating in many areas where Jet is not present. Even in the international arena, Sahara becomes complementary to the larger airline. While Jet has a presence in long-haul routes to the US and Europe, Air Sahara is operating to neighbouring countries like Sri Lanka, Nepal and Thailand. Currently Jet Airways has about 62 aircraft and operates 320 flights to 44 destinations within the country and six in foreign countries

28 Apr, 2009, 01.39AM IST,ET Bureau

Settle I-T dispute out of court: HC tells Jet, SaharaMUMBAI: The Bombay High Court on Monday advised Jet Airways and Sahara India Commercial Corporation to resolve their dispute over an income tax liability out of court. Justice DY Chandrachud expressed hope, while hearing a separate application by Jet, that both the parties would sit together to sort out their differences over the issue.

Jet and Sahara are fighting a legal battle over an income tax payment. The origin of the dispute dates back to April 2007. Jet had agreed to buy Sahara Airlines for Rs 1,450 crore, but paid about Rs 900 crore. The remaining amount of Rs 550 crore was to be paid in four equal installments. One of the clauses in the agreement between the parties stated that if there was a tax liability of over Rs 50 crore for the period before the filing of consent terms, the same would have to be borne by Sahara.

When a tax liability of Rs 107 crore arose, the Jet paid only Rs 100.50 crore as the first installment after deducting the tax liability in March last year, to which Sahara did not raise any objections. However, when Jet did the same in March this year, Sahara claimed a default of Rs 37 crore. The High Court will hear the case on Wednesday.

30 Apr, 2009, 12.18AM IST,ET Bureau

Jet, Sahara to sort out differencesMUMBAI: Jet Airways and Sahara India Commercial Corporation have informed the Bombay High Court on Wednesday that they would soon meet and discuss issues under dispute.

Jet had moved the High Court after Sahara initiated proceedings to attach Jet’s assets over a tussle pertaining to an income tax liability. Justice Dhananjay Chandrachud, who is hearing the dispute, asked the parties if they had met to sort the issues.

Sahara’s counsel Fali Nariman and Jet’s counsels Harish Salve and Janak Dwarkadas told the court that they had not, but would be meeting soon. The court then posted the hearing to May 6.

Two days ago, while hearing an application filed by Jet to lease three of its aircraft to Turkish Airlines, the court had advised the parties to try and settle matters out of court.

It also allowed Jet to give three aircraft to Turkish Airlines on a dry lease basis for 25 months. Earlier, the three aircraft were given to Turkish Airlines on wet lease (with cabin crew, maintenance and insurance).

Jet’s application was pursuant to the High Court’s order of March 31, which said that Jet could not alienate any of its assets until the dispute with Sahara was settled.

Jet Airways had agreed to buy Sahara Airlines in April 2007 for Rs 1,450 crore. It paid about Rs 900 crore in the same month, started operating Sahara Airlines as a low-cost carrier and renamed it as JetLite. The remaining Rs 550 crore was to be paid in four equal installments of Rs 137.50 crore each. One of the clauses of the agreement, Jet claimed, was that if a tax liability of over Rs 50 crore arose for the period before filing the consent terms, the same would be borne by Sahara.

When a tax liability of Rs 107 crore arose, the Naresh Goyal promoted airline had paid only Rs 100.50 crore as the first instalment deducting the tax liability in March last year. Sahara did not raise any objection to the deduction in the first instalment. However, when Jet did the same in March this year, Sahara claimed default on Jet’s part and initiated proceedings to attach Jet’s assets. Jet moved the High Court and got a stay on the attachment proceedings.

9 May, 2009, 01.37AM IST,ET Bureau

End dispute amicably, HC tells Jet & SaharaMUMBAI: The Bombay High Court, on Friday, reserved its order on the ongoing dispute between Jet Airways and the Sahara group till next month. It suggested the dispute be resolved amicably and out of court. The two parties are at loggerheads over a dispute relating to a tax liability, which is said to have accrued before Jet acquired Sahara.

Justice Dhananjay Chandrachud, on Friday, stated: “Counsels have said that both parties will make an attempt to come to a solution on the dispute during the (court) vacation.” The matter will be taken up for directions after the vacation on June 12, if a settlement is not reached, else it would be decided through further proceedings, the court observed.

Earlier, Sahara’s counsel, Fali Nariman had said that an out-of-court settlement between the two parties was not possible, though Jet counsel, Janak Dwarakadas, said his client was still open to out-of-court negotiations.

The court suggested that when the parties meet to resolve their dispute, they could come up with a ‘realistic assessment’ of the monies to be paid. As such, Jet could make an upfront payment of Rs 450 crore in the court, while Sahara could furnish a reasonable bank guarantee to cover the tax liability.

The Sahara group, in March, had initiated the process of attaching Jet’s assets claiming that the Naresh Goyal-owned carrier had defaulted on the instalment amount due as payment for the acquisition of Sahara Airlines which has since then been rebranded as JetLite.

Jet then dragged Sahara to court alleging that Sahara had failed to pay tax liability that had accrued before the two had signed the agreement. This tax liability was in excess of Rs 50 crore.

Sahara claims that the share purchase agreement between Jet and itself did not allow Jet to deduct any amount from the instalment. It could instead ask for a reimbursement if the liability was over Rs 50 crore. As a result, Jet is now liable to pay Rs 2,300 crore to Sahara

3 Jul, 2009, 12.19AM IST,ET Bureau

Jet, Sahara yet to resolve tax issueJet Airways on Thursday informed the Bombay High Court that Sahara India Commercial Corporation did not respond to its offer to settle the legal tussle on tax payment outside the court, reports Our Bureau in Mumbai.

“We have made our overtures,” said Jet’s counsel Janak Dwarkadas, adding that Sahara has failed to respond. But Sahara’s counsel Virendra Tulzapurkar said his client had not been contacted for any meeting after June 16.

The High Court has allowed Jet Airways and Sahara a final adjournment till July 15 to decide if they could reach an amicable settlement outside court. Justice Dhananjay Chandrachud asked both parties to sit across the table and see if the dispute could be resolved. In the event of that not taking place, the parties must make their final submission on the matter, which will allow the court to pronounce its judgement on the issue, he said.

Sources familiar with the development said a meeting between Jet and Sahara was possible before July 15, given that there was a “meaningful” meeting that took place in the first week of June. Jet bought Sahara Airlines (now JetLite) in 2007 for Rs 1,450 crore.

Jet paid Rs 900 crore upfront and agreed to pay the balance in four instalments. In March 2008, the I-T department demanded tax dues of Rs 107 crore from Sahara Airlines, but Jet refused to pay this amount. Jet said it was due from the Sahara Group, as it pertained to the period before the acquisition.

15 Jul, 2009, 07.55PM IST,PTI

Out-of-court settlement not possible : Jet, Sahara tell HCMUMBAI: Jet Airways and Sahara India Commercial Corporation told the Bombay High Court on Wednesday that they could not arrive at an out-of-court settlement to their dispute over the Rs 1,450-crore Sahara Airlines takeover deal.

Urging the court to resolve the dispute, Janak Dwarkadas and Fali Nariman, counsels of Jet and Sahara respectively, submitted that it was not possible for them to arrive at an amicable solution to the issue.

The court has now adjourned the matter to August 5. Meanwhile, Jet's informed the court that it would respond on July 29 to Sahara's report on valuation of the erstwhile Sahara Airlines by Ernst and Young.

Sahara in March filed a petition claiming that the Naresh Goyal-owned airline had defaulted on the installment amount due as payment for acquisition of Sahara Airlines, now JetLite, hence it was liable to pay original deal amount of Rs 2,300 crore and not re-negotiated amount of Rs 1,450 crore.

15 Jul, 2009, 07.55PM IST,PTI

Out-of-court settlement not possible : Jet, Sahara tell HCMUMBAI: Jet Airways and Sahara India Commercial Corporation told the Bombay High Court on Wednesday that they could not arrive at an out-of-court settlement to their dispute over the Rs 1,450-crore Sahara Airlines takeover deal.

Urging the court to resolve the dispute, Janak Dwarkadas and Fali Nariman, counsels of Jet and Sahara respectively, submitted that it was not possible for them to arrive at an amicable solution to the issue.

The court has now adjourned the matter to August 5. Meanwhile, Jet's informed the court that it would respond on July 29 to Sahara's report on valuation of the erstwhile Sahara Airlines by Ernst and Young.

Sahara in March filed a petition claiming that the Naresh Goyal-owned airline had defaulted on the installment amount due as payment for acquisition of Sahara Airlines, now JetLite, hence it was liable to pay original deal amount of Rs 2,300 crore and not re-negotiated amount of Rs 1,450 crore.

19 Nov, 2009, 01.48PM IST,PTI

HC grants time to Jet, Sahara to file affidavitsMUMBAI: The Bombay High Court today granted two months time to Jet Airways and Air Sahara for filing affidavits with regard to the dispute over the multi-crore take-over deal.

Both the parties sought time to file additional affidavits following which the Court deferred the case for further hearing to January 19.

Sahara had in March filed a petition claiming that the Naresh Goyal-owned airline had defaulted on the instalment amount due as payment for acquisition of Sahara Airlines, now JetLite. Hence, it was liable to pay the original deal amount of Rs 2,300 crore and not the re-negotiated amount of Rs 1,450 crore

31 Mar, 2010, 12.38AM IST, Almas Meherally & Manisha Singhal,ET Bureau

Jet deposits Rs 137.5 cr with HC in Sahara caseMUMBAI: Jet airways deposited Rs 137.5 crore with the Bombay High Court on Tuesday, the penultimate day of the current fiscal, even as it continued a prolonged legal battle with the Sahara Group over the payment of taxes.

Jet Airways and Sahara India Commercial Corporation (SICCL) — the erstwhile owner of Air Sahara — are fighting it out in court over who has to pay taxes due to the government prior to the acquisition of Air Sahara in 2007 by Jet.

Jet had moved an application on Monday before Justice Dhananjay Chandrachud seeking to deposit the amount with the court instead of paying it to Sahara. It’s counsel Janak Dwarkadas said that they were willing to let SICCL withdraw the deposited money if Sahara provided a security against it.

He told the court that the dispute over Rs 800 crore of tax owned by SICCL before 2007 was yet to be resolved. Jet says that this amount was not disclosed and that Sahara should pay.

Sahara’s lawyer Pradeep Sancheti, however, argued that the money should be given directly to SICCL. He said that depositing the money with the court amounted to default. The court upheld Sahara’s right to pursue this line of argument on the issue of default on April 30, when the case comes up for further hearing.

Jet acquired Sahara in 2007 for Rs 1,450 crore. This amount was agreed to after an earlier contract, which required Jet to pay Rs 2,300 crore, fell apart. Jet Airways then paid Rs 900 crore upfront and the remaining Rs 550 crore, was to be paid annually beginning March 2008. The yearly instalments are Rs 137.5 crore.

The new agreement stipulates that if Jet defaults on payment of instalments, then Jet will have to pay Sahara the entire Rs 2,300 crore for the buyout instead of Rs 1,450 crore.

But Jet says it later found that Air Sahara owned taxes to the government, some of which it had not disclosed. It then started deducting some of the tax dues from the yearly instalments, resulting in both sides ending up in court.

Jet deducted Rs 50 crore from the annual instalments it pays to SICCL for acquiring Air Sahara, on account of the income tax demands. Jet had also deducted Rs 37.50 crore from the first instalment in March 2008. Air Sahara is now known as JetLite, a fully-owned, low-cost subsidiary of Jet Airways