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Journalism of Courage
The Bombay High Court on Wednesday said the Directorate of Revenue Intelligence (DRI) cannot use Letter Rogatory (LR) to obtain information from foreign jurisdictions including Singapore for its probe into the alleged over-valuation of Indonesian coal import by a few firms Adani Group firms, till the high court finally decides on the Adani Group’s plea seeking to quash LRs issued by the probe agency in 2017.
An LR is a formal request seeking judicial assistance from a foreign country in investigating an offshore entity.
A division bench of Justice Ranjit More and Justice Bharati H Dangre were hearing a writ petition filed by Adani Enterprises Ltd(AEL), that claimed the LRs were issued “without any notice and hearing the companies” and “no cognizance of any offence” under the Customs Act 1962 has been registered till now by the DRI against the Adani firms in the coal case.
The court granted Adani’s prayer seeking to restrain the agency “by themselves, their servants, agents and/or subordinates from in any manner whatsoever, directly or indirectly giving effect to and /or continuing to give effect to the Letter Rogatory issued by the learned metropolitan magistrate , Mumbai in relation to import of coal of Indonesian origin” till the hearing and final disposal of the case filed by AEL.
AEL in its petition has also claimed, that section 166A of Criminal Procedure Code (CrPC) which deals with issuance of LRs is “ex-facie not applicable” to investigations under the Customs Act. AEL also said that LRs can be issued under section 166A only when an offence is being probed by a police officer or a person authorised by a magistrate on his behalf.
Justice More said that DRI “cannot have it both the ways”, one being that chapter 12 of CRPC does not apply on Customs act and another LRs being issued under 166A of Criminal Procedure Code (CrPC). The bench said that unless the crime is registered, the agency cannot issue Lrs under CRPC.
So far, the DRI has issued 14 LRs to multiple foreign jurisdictions such as Singapore, Hong Kong, Switzerland, UAE among others seeking information in the alleged over-valuation of imports of Indonesian coal. It is not clear if the DRI will appeal against the interim stay granted by the Bombay High Court on Wednesday.
According to sources, the agency has requested the Finance Ministry to appoint a special counsel to argue its case in the Bombay High court but it is yet to get an approval from the ministry.
In 2016, 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. However, DRI is yet to get the documents from the banks.
Meanwhile, two private sector banks have already submitted all the documents pertaining to coal imports case on the request of the agency.
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.
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.
