On October 10, hearing a case regarding the alleged over-invoicing of Indonesian coal imported by the Adani Group, the Supreme Court clubbed the matter with another case related to 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 four times in four years since and is yet to reach the argument stage.
The Additional Solicitor General, representing DRI, drew the apex court’s attention on October 10 to a recent order by a different bench in another case involving the agency. Two questions formulated in that order would have relevance in the Adani case, the court said, and ordered that ‘both the matters be placed before the appropriate Bench’ without specifying any date.
The two relevant questions — 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 – were framed by the Supreme Court on July 4 in the DRI’s case against the Hyderabad-based jeweller who was arrested under the PMLA in 2021.
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. An LR is a formal request seeking judicial assistance during an investigation involving a foreign entity.
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.’
That one week stretched to nearly three-and-a-half years.
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.
