Jet Airways founder Naresh Goyal seeks bail, denies siphoning off funds

Naresh Goyal, the founder of Jet Airways, has applied for bail three months after his arrest by the Enforcement Directorate (ED), claiming innocence and refuting allegations of siphoning off funds. Goyal, who was arrested on 1 September under the Prevention of Money Laundering Act (PMLA), has argued that he did not divert loan money for personal benefits, but attributed the airline's closure to industry challenges and substantial losses.

The arrest was related to accusations of misappropriating funds from a Rs 538.62 crore loan provided by Canara Bank to Jet Airways. The case stems from an FIR by the Central Bureau of Investigation (CBI) against Jet Airways, Goyal, his wife Anita, and a few former executives of the now grounded private carrier.

The FIR was registered on the government-run bank's complaint, which alleged that it sanctioned credit limits and loans to Jet Airways (India) Ltd to the tune of Rs 848.86 crore, of which Rs 538.62 crore was outstanding.

In response to claims that family members were appointed and funds directed toward their salaries, Goyal contended that these actions were approved by an independent board and audit committee, pointing to his lack of involvement.

The entire investigation has been carried out only with the intention to allege and project siphoning (of funds) by the applicant for his personal benefits, said the plea filed before special PMLA court judge MG Deshpande in Mumbai.

From reading the complaint, it is more than clear that "false allegations have been made by the ED solely with a mala fide intention of projecting a negative image of Goyal", it said.

Goyal stated in his bail application that Jet Airways commenced operations in 1993, and for 25 years, the company never defaulted on financial commitments to banks and the Airports Authority of India. He pointed to challenges faced by the airlines industry in India, including a global economic slowdown, rising fuel prices, adverse foreign exchange rates, and high infrastructure and ground handling costs.

The plea argued that Jet Airways, operating as a full-service premium carrier, faced increased competition with the advent of low-cost carriers, resulting in mounting losses. Attempts to mitigate losses through the acquisition of a low-cost carrier were hindered by regulatory policies, exacerbating the financial challenges. The cumulative consolidated loss for Jet Airways as of 31 March 2019 was approximately Rs 15,000 crore.

Goyal's plea referenced a statement by minister of civil aviation Jyotiraditya Scindia in 2022, highlighting Air India's accumulated losses of Rs 85,000 crore from 2007-08 to 2020-21. It underscored that the airline, lacking emergency funding, suspended operations on 18 April 2019, despite having an annual turnover of Rs 25,000 crore in FY 2017-18.

The plea further detailed that in 2018, efforts to revive the airline through a payment of Rs 750 crore each by the State Bank of India and Etihad were not implemented. Goyal claimed to have made a personal contribution of Rs 250 crore as collateral security in 2019, which was not returned.

The plea contended that the allegations by the ED were vague and overlooked the airline's 25 years of operation. It emphasised that decisions were made collectively by the board, and Goyal was not a personal guarantor for any credit facilities or loans taken by the company.

In his plea, the 74-year-old businessman has also cited multiple health ailments such as a heart condition, prostate and orthopaedic problems among others, and claimed there are reasonable grounds to believe he "is not guilty".

The court has asked the ED to file its reply to Goyal's plea by 20 December.

(With inputs from PTI)