Delhi High Court dismisses plea by Centre for PIL and Harsh Mander seeking probe into alleged over invoicing by Essar Group, Adani Group among others

delhi high court

Delhi High Court: Two petitions were filed, one by the Centre for Public Interest Litigation (petitioner 1) seeking a probe by the Special Investigating Agency (SIT) into reports of the Directorate of Revenue Intelligence (DRI) against various private power-generating companies for over-invoicing carried out by them. The other petition was filed by Common Cause (petitioner 2) seeking a direction to the Central Bureau of Investigation (respondent 3) to investigate cases in respect of over-invoicing in power projects, as reported by the Directorate of Revenue Intelligence (DRI) OR to set up a Special Investigating Team (SIT) under a retired Judge of the Supreme Court of India to probe into the over-invoicing. A division bench of Suresh Kumar Kait and Neena Bansal Krishna, JJ., decided not to interfere as the allegations are regarding inflated rates of the tariff of electricity which is governed by the Tariff Regulatory under the guidelines of the Central Government.

The Centre for Public Interest Litigation claimed to be a registered society formed for the purpose of taking up causes of grave public interest and conducting Public Interest Litigation (PIL) and Common Cause (petitioner 2), also claimed to be a registered Society for the purpose of ventilating the common problems of the people and securing their resolutions. The present petition also seeks a direction to the Department of Revenue and Ministry of Power (respondents 1 and 2), to make a declaration of the international market price a mandatory part of the bill of lading/ shipping at the time of presentation of the documents to Customs Authority of India (CAI) and to direct Reserve Bank of India (RBI) (respondent 5) to make it mandatory for Banks to require declaration of international market price while granting credit/discount facilities on any bill of lading/ invoice for import in India.

The modus operandi adopted is that though the coal or equipments are shipped directly to India, however, the invoicing has been routed through a different company incorporated abroad, which is directly owned and controlled by the promoters of the project in India.

The Court noted that the case of the petitioners in these petitions are premised upon a Show Cause Notice dated 15-05-2014 and dated 31-03-2016 issued by DRI promulgating that the intelligence has indicated that various entities of 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. So far as the allegation of petitioners in respect of over-invoicing with exaggerated rates is concerned, from the material placed before the Court, the Court observed that on 15-05-2014, DRI had issued Show Cause Notices to Adani Power Maharashtra Ltd., Adani Power Rajasthan Ltd., Maharashtra Eastern Grid Power Transmission Co. Pvt. Ltd., and PMC Projects (India) Pvt. Ltd. Subsequently, Show Cause Notice dated 31-08-2016 were also issued to Adani Enterprises Ltd., Adani Renewable Energy, Adani Hazaria Port Private Ltd., Adani International Container Terminal (P) Ltd. & Adani Ports and Special Economic Zone Ltd. and Adani Vizag Coal Terminal Pvt. Ltd. However, the respondents have already initiated process of law under the appropriate provisions before the competent forum.

The Court further observed that so far as the petitioners are invariably dissatisfied with the manner in which the investigation of different cases was carried out by the respondents and therefore, approached the Court seeking the setting up of a Special Investigating Team (SIT) under a retired Judge of the Supreme Court of India, the Court found that the petitions were filed in the year 2017 seeking SIT probe in public interest, as they were aggrieved of inaction on the part of respondents. As per the status report, multiple proceedings are pending before CESTAT and other Forums.

The Court concluded that as far as allegations of petitioners regarding to inflated rates of the tariff of electricity are concerned, the provisions of the Electricity Act, 2003, make it clear that under Section 61 of the Act, it is the Tariff Regulatory, which govern the tariff based upon service for generation, transmission, and distribution as well as the cost of the project, which is determined through a transparent process of bidding under the guidelines of the Central Government. Thus, there seems no need for interference by the Court.

The Court directed the respondents to meticulously and expeditiously look into the allegations of the petitioners to unearth actual factual position and take appropriate actions against the erring companies, if any, as per law.

[Centre for Public Interest Litigation v Union of India, 2023 SCC OnLine Del 8113, decided on 19-12-2023]

Advocates who appeared in this case :

Mr. Prashant Bhushan, Senior Advocate with Ms. Neha Rathi & Ms. Kajal Giri, Advocates for petitioner

Mr. Farman Ali & Ms. Usha Jamnal, Advocates for Mr. Ravi Prakash, CGSC for UOI

Mr. Aditya Singla, Senior Standing Counsel with Ms. Charu Sharma & Mr. S. A. Rabde, Advocates for DRI with Assistant Director, DRI, Mumbai Mr. Nikhil Goel, Special Public Prosecutor with Ms. Siddhi Gupta & Mr. Adithya Koshy Roy, Advocates for CBI with Mr. M.K. Singh, DSP, CBI

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