Bombay HC dismisses Jet Airways founder Naresh Goyal's plea challenging his arrest by ED

The Bombay High Court on Tuesday dismissed Jet Airways founder Naresh Goyal's plea challenging his arrest by the Enforcement Directorate (ED) in connection with the alleged laundering of a Rs 538.62-crore loan given by Canara Bank for the airline. 

On September 1, the ED had arrested Goyal claiming that he had siphoned off the bank loan and diverted company funds by appointing his family members in the company and paying salaries of a company floated by his daughter. 

Goyal was arrested by the ED under the Prevention of Money Laundering Act (PMLA) and is lodged at the Arthur Road jail in Mumbai.

Goyal, who is in judicial custody at present, has denied these claims and said that the money was utilised towards the company. 

The ED’s case was filed based on an FIR filed by the CBI in May on a complaint given by Canara Bank in November 2022. 

On September 17, Goyal had moved the Bombay High Court challenging his arrest claiming that his arrest was illegal, and sought to set aside orders of a special court that had remanded him initially in ED custody and thereafter in judicial custody.

Earlier this week, the agency filed a chargesheet against Goyal, his wife Anita, JIL and various entities in the case.

As per the chargesheet, Goyal told ED that Jet failed due to high fuel prices and taxes, high landing navigation charges, high global distribution system (GDS) cost and the government’s refusal on the merger of Jet Lite Ltd (JLL) with JIL.

However, the top executives at Jet Lite and Jet denied the claims, Indian Express reported. JIL and JLL CEO Vinay Dube said he “found decision making at the airline to be very cumbersome and most strategic decisions were not made in a timely manner”. 

He added that even as CEO, he was not in a position to implement his plan with the speed that the airline required.

Dube told ED that JIL closed down because the airline did not generate cash from operations and was not sufficiently capitalised. In the case of Jet Lite, the cost structure was too high to compete with other low cost carriers (LCC).

He said when he joined the company as JLL’s CEO, he told the management that the airline was in “financial mess” and the company needed to be recapitalised. However, the board didn't respond to the plea as was a shareholder matter and Goyal, being the largest shareholder, refused to move on this.

In his statement, Ravichandran Narayan, Senior Vice President, Finance, JIL, said that bulk order of wide-body aircraft with three class configurations was one of the reasons JIL was grounded.

In his statement to ED, Narayan said: "The negotiations for this purchase were led by the Chairman personally. Jet could not effectively deploy its fleet on profitable routes leading to mounting losses. At the same time, these aircraft also could not be left on the ground as they were incurring fixed costs without any revenue."