Indian Contract Act shines in Jet-Sahara deal

Mumbai: A 16 month long acrimonious spat between two airlines companies Jet Airways and Sahara ended tamely on Thursday without going to the courts. How?
Says a lawyer who was involved in the negotiations between the two companies: "If you leave alone commercial considerations, the merger between Jet and Sahara happened sheerly on the strength of the water tight contract they signed earlier on." Contracts between entities are covered by the Indian Contract Act, 1872.
Jet Airways chairman Naresh Goyal sought to resolve the matter through negotiations just when the arbitration panel headed by Lord Teyn was about to initiate its proceedings.
On January 18, 2006, Jet Airways signed a share purchase agreement (SPA) with Sahara group's Subroto Roy to buy all his shares if certain conditions were satisfied. These conditions, like getting consent of lenders, lessors of aircraft and government permission to reconsititute the Sahara board had to be obtained before March 23, later extended to June 21.
The contract clearly defined what constituted a default and the consequences of default by either parties. The Act also provided for arbitration by an independent panel if either party was unwilling to fulfil their agreement.
14/04/07 T. Surendar/Times of India

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Categories: Air Sahara Apr 2007, Jet Airways Apr 2007