SC stays hearing in Jet-Sahara case

The Supreme Court today stayed arbitration proceedings involving Jet Airways and Air Sahara in the Lucknow district court, with the result that Jet will not be able to get for some time its claim of Rs 1,500 crore lying in an escrow account with ICICI Bank.

A bench headed by Chief Justice YK Sabharwal also stayed arbitration proceedings moved by Jet Airways in the Bombay High Court. The court issued notices to all parties in the failed agreement, and will hear them after three weeks.

The court passed the order after hearing a petition moved by Jet Airways, seeking the transfer of all cases to the Bombay High Court.

Its counsel Harish Salve said the Lucknow district court could not have heard the arbitration proceedings as the four agreements for takeover of Sahara by Jet Airways contained specific clauses that arbitration would take place in Mumbai.

The escrow agreement specifically mentioned that such mediation would take place only in Mumbai. Thus, the Lucknow court had proceeded to hear the dispute without jurisdiction, the counsel argued.

The Lucknow district court, on June 21, passed an order restraining Jet Airways from demanding or receiving Rs 1,500 crore deposited in the escrow account with ICICI Bank. The bank was also restrained from releasing the amount to Jet. The bank has intervened in the Supreme Court proceedings.

In the transfer petition, Jet Airways asserted that the Lucknow court had no jurisdiction as it (Jet) had already initiated proceedings in Mumbai, and, therefore, the balance of convenience clearly lay in favour of the whole case being heard in Mumbai. Jet Airways has already filed a petition under the Arbitration & Conciliation Act in the Bombay High Court.

Jet's Rs 2,300 crore deal to acquire Air Sahara fell through last month, leading to a slew of litigation in various courts.