Adani Enterprises Ltd (AEL), the flagship firm of the Adani Group, has moved Bombay High Court seeking to quash all Letters Rogatory (LRs) issued by the Directorate of Revenue Intelligence (DRI) to other countries against a few Adani Group firms that are being probed in connection with alleged overvaluation of Indonesian coal imports.
An LR is a formal request seeking judicial assistance from a foreign country in investigating an offshore entity.
AEL filed a writ on Tuesday against the Union of India.
This comes weeks after the High Court of Singapore ruled against Adani Global Pte Ltd, which had moved the Singapore court, seeking a stay on a lower court’s demand to produce crucial documents pertaining to coal imports from Adani firms.
The lower court of Singapore had served about 24 production orders to Adani firms after it received an LR from DRI seeking mutual assistance to obtain these documents pertaining to Indonesian coal imports for its ongoing probe.
Emails and phone calls to the official spokesperson of the Adani Group did not elicit any response.
Apart from the Adani Group, the DRI is probing at least 40 companies including two companies of the Anil Dhirubhai Ambani Group (ADAG), two Essar Group firms and a few public sector power firms for alleged overvaluation of coal imports from Indonesia pegged at Rs 29,000 crore between 2011 and 2015.
The Indian Express had reported on June 20, 2016 that three state-owned banks declined to provide to the DRI information lying with their overseas branches regarding transactions by leading power companies in connection with the coal imports case.
The banks had cited confidentiality norms which prompted Revenue Secretary Hasmukh Adhia to write to these lenders to cooperate with the ongoing investigation.
Subsequently, DRI issued LRs to Singapore, Dubai and Hong Kong seeking their help to access documents lying with overseas branches of the state-owned banks relating to transactions by top power companies that were under probe.
In March 2016, DRI issued a general alert to its field formations across India, outlining the modus operandi of over-invoicing of coal imports from Indonesia. DRI alleged that money was being “siphoned” outside the country and the electricity-generating firms were availing of “higher tariff compensation based on artificially inflated cost of the imported coal”.
The DRI alleged that Indonesian coal was directly imported from ports in that country to India while import invoices were routed through one or more intermediaries based in Singapore, Hong Kong, Dubai and British Virgin Islands to artificially inflate its value.
The agency, according to sources, found that inflated invoices received in India were issued by intermediaries, allegedly subsidiary companies of Indian importers or their fronts. The DRI alleged that in certain cases, the import value of Indonesian coal was artificially inflated by about 50 to 100 per cent by changing test reports which measure the calorific value of coal.
The DRI also raided over 80 shipping companies, labs and intermediaries including many in Maharashtra, Delhi, Gujarat, Karnataka, Odisha, West Bengal, Andhra Pradesh and Kerala to obtain documents that show the real value of imports.
The DRI alleged that an artificial inflation of value of the imported coal increases the landed cost of coal, which is a primary fuel in coal fired thermal power plants. The higher tariff dispensed by the electricity regulator to the power generator enhances the cost of purchase of the power distributor which, in turn, factors this artificially enhanced cost in its billing to consumers.