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Adani Probe: SC Stays Bombay HC Order that Stopped DRI's Overseas Investigation

The Bombay HC had quashed all global information requests the DRI had sent to foreign countries pertaining to alleged overvaluation of coal imports by two Adani firms.

New Delhi: The Supreme Court on Wednesday stayed a Bombay high court order which had effectively stopped an investigation by India’s customs intelligence agency into alleged overvaluation of coal imports by two Adani Group firms.

The apex court also issued notice to Adani Enterprises Ltd on an appeal by the Directorate of Revenue Intelligence (DRI) in the matter connected with the alleged over-invoicing of Indonesian coal imports.

In October 2019, the Bombay high court dealt a setback to the DRI by quashing the ‘letter rogatory’ (LRs) it had sent to various countries over its investigation into Adani Enterprises Ltd (AEL).

This effectively halted the probe that had been going on since 2016.

An LR is a formal request sent by an investigation agency to a foreign government asking for help in accessing information on an offshore entity.

The Wire was the first to exclusively report in March 2018 about how the DRI had issued LRs to courts in countries like Singapore, Dubai, Hong Kong, Switzerland and Indonesia to seek documents and gather evidence under the bilateral treaties that India has with those countries.

Also read: DRI Accuses Adani Group Firm of Impeding Over-Invoicing Probe in Bombay HC Affidavit: Report

Some of India Inc’s biggest names – including the Adani Group, Essar and Reliance Infrastructure – are under the DRI’s scanner for allegedly inflating the prices of imported coal and power equipment to divert and launder money.

The Adani Group, however, has been locked in a legal battle with the DRI over its decision to issue LRs. In June 2019, the tax intelligence agency accused the Adani Group of trying to “impede” its probe by challenging the “well settled procedure of issuance of Letter Rogatory” in the Bombay high court.

In particular, the DRI’s affidavit critically noted that Adani Enterprises only moved the Bombay high court to question the issuance of LRs only after a Singapore court allowed India’s request to access documents that allegedly contain “clinching evidence” against the Adani Group’s “blatant” hike in prices of imported coal for “siphoning” money and “increasing” the cost of power sold to public in India.

Also read: Why a Multi-Agency Probe Is Needed to Get to the Bottom of India’s Over-Invoicing Scams

The Bombay high court however last year ruled in favour of Adani. In particular, a division bench of Justice Ranjit More and Justice Bharati H. Dangre, said that DRI cannot issue LRs under Section 166A of the Code of Criminal Procedure until a First Information Report (FIR) is registered in a case under Section 154/155 of the CrPC.

The investigative agency, however, has contended that its work – unlike that of a police offer – does not begin by registering an FIR or seeking an order from magistrate, and therefore it is within its right to issue LRs as part of gathering investigation before registering a case.

The Wire has reached out to the Adani Group for a statement and this story will be updated if and when a response is received.

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