Jet Airways Founder Naresh Goyal Arrested by ED in ₹538.62 Crore Bank Fraud Case
- ByStartupStory | September 3, 2023
On September 1, the Enforcement Directorate (ED) arrested Naresh Jagdishrai Goyal, the founder chairman of Jet Airways (India) Limited, in connection with an alleged loan fraud case involving approximately ₹538.62 crore from Canara Bank.
The arrest came after Mr. Goyal was summoned to the ED’s Mumbai office for questioning, which subsequently led to his arrest.
The ED’s investigation is linked to a case initiated by the Central Bureau of Investigation (CBI) in May. Accused in the case include the company itself, Mr. Goyal, his wife Anita Naresh Goyal, and Gaurang Ananda Shetty.
According to the allegations, the company was initially granted a working capital limit of ₹126 crore and an inland letter of credit/financial bank guarantee limit of ₹100 crore for various purposes. Additionally, it received ₹400 crore as a term loan for operational expenses, ₹200 crore for aircraft reconfiguration, the introduction of new routes, business promotion, and related activities, along with ₹17.52 crore as a short-term loan.
The First Information Report stated that the company began claiming liquidity and operational issues from August 2018, unable to meet payment obligations. In response, lenders invoked inter-creditor agreement provisions, with the State Bank of India appointed as the leader.
Jet Airways was instructed to submit a resolution plan and infuse ₹3,500-₹4,000 crore, but these conditions were not met. The company also defaulted on payments by December 31, 2018, leading the banks to take the matter to the National Company Law Tribunal. Subsequently, Jet Airways suspended its operations in April 2019.
Canara Bank declared the loan account as a non-performing asset on June 5, 2019. A forensic audit of the company’s financials covering the period from April 1, 2011, to June 30, 2019, revealed alleged diversion and siphoning of funds.
The allegations also involve payments of ₹1,410.41 crore to related parties under commission expenses and funds siphoning through Jet Lite (India) Ltd., which were later written off. During 2011-18, ₹14,552.44 crore was extended as a loan to Jet Lite, with ₹13,529.62 crore received in return.
Canara Bank further claimed that Jet Airways was transferring borrowed funds to subsidiary/group entities through various channels. The review period revealed ₹1,152.62 crore paid for professional and consultancy services, with alleged suspicious transactions of ₹197.57 crore detected in the case of linked entities. Additionally, over ₹420 crore was paid to entities with a different nature of business from the service description in their invoices.
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