Jet Airways founder blames market conditions for airline's collapse in 2019, ED alleges ‘systemic fraud’

The ED opposed the plea, alleging Goyal orchestrated a wider fund-diversion mechanism involving related entities and sought framing of charges.

Seeking discharge from the ₹538.62-crore money laundering case, Jet Airways founder Naresh Goyal on Friday claimed that the airline’s 2019 financial crisis was caused by adverse macroeconomic conditions rather than any fraudulent conduct on his part.

Jet Airways founder Naresh Goyal, who has sought discharge from the money laundering case linked to the airline’s financial crisis. (HT Archive)

The case stems from an FIR registered by the Central Bureau of Investigation (CBI) in May 2023 based on a complaint by Canara Bank, which alleged that Jet Airways (India) Ltd had defaulted on ₹538.62 crore out of loans and credit facilities worth ₹848.86 crore sanctioned to it. The Enforcement Directorate (ED) subsequently registered a money-laundering case and alleged that funds from the loans were diverted and used for purposes unrelated to the airline.

Goyal blames market conditions for crisis

“However, this situation was solely attributable to adverse market conditions, and not due to any fraudulent conduct by the applicant [Goyal] or other members of the management,” the plea said, describing the airline’s financial distress as “the product of commercial and industry conditions, not evidence of laundering”.

ED accuses Goyal of systemic fraud

Opposing the plea, ED alleged Goyal had “orchestrated a systemic fraud, bleeding a premier national airline to death, defrauding public sector banks… and enriching himself and his family through a sophisticated global laundering network”.

The ED said it had established “through incontrovertible documentary and testimonial evidence, a prima facie case of extraordinary magnitude” and urged the court to reject the plea and proceed with framing of charges.

The agency’s case is that the alleged diversion of funds was not limited to the ₹538.62 crore default but involved a wider mechanism through which money advanced to Jet Airways was routed through related entities and used for purposes other than those for which the facilities were sanctioned.

Goyal was arrested by ED in September 2023 in connection with the case and was subsequently granted medical bail. The proceedings are currently at the stage preceding framing of charges, with the court considering Goyal’s discharge plea. The matter will be heard next on September 9.