Jet gets access to Rs 1,500 cr in escrow

In a temporary reprieve to Jet Airways in its on-going legal battle with Air Sahara, the Bombay High Court today allowed the airline to withdraw Rs 1,500 crore parked in an escrow account against a bank guarantee.

Jet Airways had earlier deposited Rs 1,500 crore with ICICI Bank in an escrow account for acquiring a controlling stake in Air Sahara for Rs 2,300 crore.

The decision on the other pending cases, including the Rs 500 crore advance paid to Air Sahara by Jet, will be heard by the arbitration tribunal from October 9. The tribunal comprises retired Chief Justices SP Bahrucha and Jeevan Reddy and Lord Stein.

However, the interest amount accrued on the Rs 1,500 crore escrow account will go to Air Sahara.

Following the collapse of the acquisition deal, the Lucknow High Court had barred Jet from operating the escrow account on a petition filed by Air Sahara. Later, the Supreme Court had transferred all the cases filed by Jet Airways and Air Sahara to the Bombay High Court.

Aviation analysts feel the order will be an interim relief for Jet and will help the airline tide over a cash crunch. "This will give an edge to Jet Airways, at least from the balance sheet perspective. They can deploy the money in expansion plans. Furnishing a bank guarantee will not be a problem for Jet Airways," an investment banker said.

Another analyst said the next critical thing would be the arbitration tribunal's decision. "Though the loss of interest will continue to hurt Jet Airways, speedy settlement of this legal tangle will help both parties focus on their businesses," he said.

Senior executives of Jet Airways and Air Sahara declined to comment.

Sources said Air Sahara was working out a plan to take the legal battle forward and this would be soon finalised.

Jet's lawyer Harish Salve said the airline would submit the bank guarantee for Rs 1,500 crore on September 25. "Now, Jet has access to its escrow account. However this is an interim order which will later be modified by the arbitration tribunal's decision," said Salve.

Declining to comment on the next move, Air Sahara lawyers said the interest accrued on the escrow account would be going to Air Sahara's account.

"The path for Jet Airways will not be easy as it will have to furnish a bank guarantee for the same amount," they said.

The Jet scrip today was up by 2.07 per cent on the Bombay Stock Exchange at Rs 653.95 from yesterday's close of Rs 640.70 .