The Delhi High Court has directed the Union Government, the Central Bureau of Investigation (CBI), and the Directorate of Revenue Intelligence (DRI) to meticulously and expeditiously investigate allegations of over-invoicing in coal imports and equipment by several power companies, including the Adani Group and Essar Group. This directive was issued by a division bench comprising Justice Suresh Kumar Kait and Justice Neena Bansal Krishna.
The court’s order came while disposing of two Public Interest Litigation (PIL) petitions filed in 2017. One PIL was moved by the Centre for Public Interest Litigation and Common Cause, represented by Advocate Prashant Bhushan, which sought a Special Investigating Team (SIT) probe into the reports of DRI against various private power generating companies for over-invoicing. The other PIL, filed by activist Harsh Mander, sought either a CBI probe or the establishment of an SIT under a retired Judge of the Supreme Court of India to probe into the over-invoicing in power projects, as reported by the DRI.
The petitioners relied on show cause notices issued by the DRI dated May 15, 2014, and March 31, 2016, which indicated that various entities of the Adani Group and Essar Group were indulging in gross over-valuation of imported goods (zero or low duty rated) to siphon off money abroad from public listed companies. During the arguments, the petitioners also referred to the Hindenburg Research Report dated January 24, 2023, and the OCCRP report, alleging that the promoters of the Adani Group were engaged in the manipulation of stock prices of their listed companies.
Regarding the Essar Group, the petitioners cited a show cause notice issued by the DRI in 2015, which stated that the
“foundation for siphoning off foreign exchange appear to have been by the Essar Group by having its entities viz. EPGL, EPMPL, EOL, and EPIL enter into contracts with inflated consideration amounts with its related entity GSF.”
The DRI informed the court that due to the large number of parties, intermediaries, especially those located overseas, and the complex nature of the transactions, the investigation was divided into multiple cases. Show Cause Notices were issued against certain companies, and Letters Rogatory were sent through jurisdictional courts to foreign courts for information retrieval.
The court was also informed that the investigation process was extremely time-consuming and complicated due to the voluminous nature of the cases, involving several stages and multiple countries. However, the DRI assured that all necessary steps were being taken for the expeditious completion of the investigation. The CBI also submitted that it had initiated investigations against various power entities.
In its ruling, the court noted that multiple proceedings are pending before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and other forums against various power firms. The court stated,
“The respondent No.2-CBVI has informed that two cases i.e., PE-BD 2014/E/0001 and RC-221/2018/E/0003 were registered against the erring companies and in the first case PE has been concluded and in both the cases investigation is in progress.”
Concluding, the Delhi High Court ordered the respondents to thoroughly and swiftly investigate the allegations to uncover the actual facts and take appropriate actions against any erring companies, as per the law. With these directions, the petitions were disposed of, marking a significant step in addressing allegations of financial irregularities in the power sector.
Also read-Punjab High Court Revisits Policemen’s Dismissal, Highlights Misuse Of UAPA And PMLA (lawchakra.in)
