Delhi HC orders CBI to expeditiously look into allegations of over-invoicing by Adani, Essar Group

 

The Delhi High Court on Tuesday directed the Central Bureau of Investigation (CBI) and Directorate of Revenue Intelligence (DRI) to look into the allegations of over-invoicing of coal imports and equipment by some companies, including Adani Group and Essar Group.

"This court finds it appropriate to direct the respondents to meticulously and expeditiously look into the allegations of the petitioners to unearth actual factual position and take appropriate actions against the erring companies, if any, as per law," the court said.

The direction came in response to two Public Interest Litigations (PIL) filed by the Centre for Public Interest Litigation (CPIL), represented by Advocate Prashant Bhushan, and another PIL filed by activist Harsh Mander.

In the petition, the applicants had referred to show cause notices issued by the DRI dated May 15, 2014 and March 31, 2016 that spoke of various entities of the two corporate giants indulging in gross over-valuation of imported goods to siphon off money abroad from public listed companies, according to PTI.

The counsel for the DRI said that due to the voluminous nature of cases, the process of investigation was extremely time-consuming and complicated, but the agency was taking all steps for their expeditious completion.

The court perused the status report filed by the DRI and noted that multiple proceedings are pending before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) and other forums. It noted the CBI had informed that two cases were registered against the erring companies and, in the first case, the preliminary inquiry has been concluded. The probe is in progress in both the cases, it noted.

The CPIL's counsel had earlier informed the court that the DRI had in March 2016 identified 40 power companies that over-invoiced coal imported from Indonesia.

The CPIL has alleged that coal and equipment required for power generation in India are bought from Original Equipment Manufacturers (OEMs) through a foreign intermediary company which is a wholly controlled/owned subsidiary of Indian power companies.

While the invoices generated by OEMs reflect the actual price of the product, those generated by the intermediary companies on Indian power entities are inflated "almost to the extent of 400 per cent", the petition claimed.

Subsequently, it alleged, the inflated cost borne by Indian power companies is passed on to the consumers who pay higher tariffs on electricity consumption.

Last month, the DRI sought permission from the Supreme Court to restart a probe into the Adani Group for the alleged overvaluation of coal imports and also requested the apex court's approval to collect evidence from Singapore. Since 2016, the DRI has been trying to procure transaction documents related to Adani's dealings from Singapore authorities. The agency suspects many of the group's coal shipments imported from Indonesian suppliers were first billed at higher prices on paper to its Singapore unit, Adani Global Pte, and then to its Indian arms, according to news agency Reuters.

In October this year, Adani Group rejected the 'over-invoicing' charge and said the issue of overvaluation in the import of coal "was conclusively settled by India's highest court of law". It said the DRI's show cause notice alleging over-valuation in the import of coal was quashed by the appellate tribunal (CESTAT). "Further, the DRI's appeal was dismissed as withdrawn by the Supreme Court of India on January 24, 2023 with the observation that 'we appreciate the stand taken by the government in not entering into futile litigation'."

Referring to the DRI's general alert circular that talked about over-invoicing, the Adani Group said the list not only included some of India's major private power generators like Reliance Infra, JSW Steel and Essar but also state power generating companies of Karnataka, Gujarat, Haryana, Tamil Nadu, etc. and NTPC and MSTC.

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(With input from news agency language)
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