New Delhi: The Civil Aviation Ministry may soon find itself in the centre of the Jet-Sahara controversy.
That's because in its petition in the Mumbai High Court, Jet Airways has mentioned three reasons for the failure of the deal and two of them directly point fingers at the Civil Aviation Ministry.
Jet Airways Chairman Naresh Goyal may have denied blaming the Government for the failure of the deal, but the Jet petition tells a different story. The petition expressly blames the Civil Aviation Ministry for not giving timely permission for the deal.
The petition, a copy of which is available with CNN-IBN, blames non-receipt of merger approvals from the Directorate General of Civil Aviation and the Civil Aviation Ministry as one of the important factors for the failed deal.
The clause that went unfulfilled is 3.1.1 of the share purchase agreement that requires "receipt of approval from the Directorate General of Civil Aviation and/or Ministry of Civil Aviation granting its permission for the sale of the entire shareholding of the company by the selling shareholders to the purchaser and change in management due to such sale."
There's another clause which Jet claims was unfulfilled. The Jet-Sahara agreement says, "As on the closing date, there is a statue, rule, regulation, policy, guideline or otherwise of the Ministry of Civil Aviation, clarifying and expressly permitting that upon a merger of two airline companies, all rights and interests in relation to airport premises, hangars, overnight parking bays, departure and arrival slots, airport check-in counters, airport lounges and all other related airport facilities required for the operation and handling of flights and overseas flying rights that have been granted, will be permitted by the Ministry of Civil Aviation to pass from the transferor airline to the transferee airline."
By mentioning this clause, Jet may be trying to imply that while the law allows the transfer of these rights, the Civil Aviation Ministry dragged its feet on sanctioning the transfer.
The Jet petition says that as two out of the three conditions were not fulfilled, the agreement stood terminated automatically.
But according to legal experts, this may not be enough for Jet to plead its case. The most significant aspect in the Jet-Sahara legal slugfest is likely to be clause 3.4 of the share purchase agreement which requires both Jet and Sahara to use all 'reasonable endeavours' to procure the necessary approvals.
Sahara could, therefore, fire back, claiming that Jet did not do enough to get these government approvals, which could mean a 'breach of contract.'
The big-bang legal boxing match is likely to revolve around these two issues with Jet arguing that it is backing out because the Government approvals, which were crucial to the commercial success of the merged company, didn't come through in time and Sahara countering that 'the deal failed because Jet didn't try hard enough'.
Meanwhile, the next date to watch out for on the failed deal is July 29 when the case comes up for hearing in the Lucknow district court.
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