IN AN affidavit to the Supreme Court, the Directorate of Revenue Intelligence (DRI) has reiterated its stand to resume investigation into the Adani Group for alleged overvaluation of coal imports and said it “has followed due process” in applying to a Mumbai court for issuing Letter Rogatory to secure some documents pertaining to the case in Singapore.
A Letter Rogatory is a formal request seeking judicial assistance during an investigation involving a foreign entity.
The affidavit was filed on October 10. The same day, the Supreme Court clubbed the matter with another case related to the alleged smuggling of duty-free gold by a Hyderabad-based jeweller.
It was in November 2019 that the DRI had moved the apex court against a Bombay High Court order in favour of the Adani Group. The case has been heard five times in four years and is yet to reach the stage of final arguments.
In its latest affidavit, the DRI pointed out that the Adani Group (respondent) and not the agency (petitioner) that has approached the SC with “unclean hands”. “… had the enquiry been a fishing and roving enquiry, the courts in India and Singapore would have, in the very first place, outrightly rejected the requests made at the behest of the Petitioner,” it said.
On the contrary, the agency underlined, in pursuance of the Letter Rogatory issued by the Metropolitan Magistrate, Mumbai, in August 2016, Singapore’s Attorney General’s Chamber (AGC) made applications before the Singapore State Court and sought six Production Orders against Adani Global Pte Ltd, Singapore (AGPTE) and other group/ related companies based in Singapore. Likewise, the AGC made applications before the High Court of Singapore and obtained 20 Production Orders against the 20 banks of Adani Global Pte Ltd. The said Production Orders were served on Adani Global Pte Ltd, its group/ related companies and the banks during July-August, 2017.
The DRI further pointed out that the agency could not get complete access to the documents required for investigation due to non-co-operation of Adani Group companies as well as their banks in submitting transaction related information. That is why, the agency pleaded, “it was imperatively felt that the said documents could only be obtained through the instrument of Letter Rogatory.”
“Permission for following this route was obtained from the Ministry of Finance as well as (the) Ministry of Home Affairs,” the 25-page filing states, adding that the investigation “is completely in compliance”.
The DRI is probing at least 40 companies for alleged overvaluation of coal imports from Indonesia pegged at Rs 29,000 crore between 2011 and 2015. The list includes six Adani companies including Adani Enterprise and Adani Power.
The Adani Group has denied any wrongdoing.
In 2016, the agency issued a general alert to field offices and customs across India on the “modus-operandi of inflating the procurement price of imported coal” with the objective of “siphoning-off money abroad” and availing “higher power tariff compensation based on artificially inflated cost of the imported coal.”
While Indonesian coal was shipped directly from Indonesian ports to India, the DRI’s 2016 alert said, suppliers’ invoices were “routed through one or more intermediaries based in Singapore, Dubai, Hong Kong, British Virgin Islands (UK) etc for the purpose of artificially inflating its value.”
Claiming that the “intermediary firms appear to be either subsidiary companies of Indian Importers or their front” companies, the DRI alert said the “cases under examination suggest huge over-valuation to the extent of about 50% to 100%.”
The DRI case against the Adani Group assumes significance as the Central Electricity Regulatory Commission (CERC) had in November 2017 pointed out that findings of the probe into alleged over-invoicing of Indonesian coal imports by Adani Power would affect the compensation it received from distribution companies in Haryana. The Adani Group has also received compensation from distribution companies in Rajasthan, Gujarat and Maharashtra.
In theory, the overvaluation of coal inflates the production cost, pushing up the power tariff fixed by the CERC or the respective state regulatory commissions, and making the consumers pay more for the consumption of electricity.
The DRI had approached the Supreme Court after the Bombay High Court had in September 2018 quashed all Letter Rogatories (LRs) sent by the agency to Singapore and other countries while probing Adani Group companies for alleged overvaluation of Indonesian coal imports.
At the first hearing in January 2020, the SC stayed the Bombay HC order. In the second hearing in February 2020, a three-judge bench headed by then Chief Justice of India SA Bobde ordered to put up the case after one week “in view of the letter circulated by Advocate-on-Record for the respondent (Adani) seeking adjournment for filing counter affidavit.”
The Adani Group took 22 months to file the counter affidavit in December 2021. It took another 19 months for the case to get its next hearing. It finally came up this July when the apex court asked the DRI to “file rejoinder affidavit as well as the additional affidavit along with the documents” and listed the matter for October 10.
On October 10, the SC referred to two questions including whether the DRI officers are police officers and whether registering an FIR under Sections 133 to 135 of the Customs Act, 1962 is mandatory before an accused is arrested – that would be relevant to this case and directed that both matters be placed before the appropriate bench.
On November 10, an SC bench fixed it for hearing next on February 6.
It was in November 2019 that the DRI had moved the apex court against a Bombay High Court order in favour of the Adani Group. The case has been heard five times in four years and is yet to reach the stage of final arguments.
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