Artificial Over-Invoicing By Power Cos: CBI Says It Closed Preliminary Involving Adanis And Others on Jurisdiction Issue As Matter Pertained To Maharashtra [Read Affidavit]

Responding to the allegations of improperly closing preliminary enquiry against Adanis in connection with artificial over-invoicing on import of power equipment, the CBI has told the Delhi High Court that it had closed a PE involving Adani Enterprises and its group company due to jurisdictional issues as the core issue pertained to transmission network within Maharashtra.

The CBI has said so in response to high court notice asking it to clear its stand on allegation that it had improperly closed a preliminary enquiry against Adanis in connection with artificial over-invoicing on import of power equipment.

The CBI has informed the court that “PE was registered on June 12, 2014 against M/s Maharashtra Eastern Grid Power Transmission Company ltd, PMC projects India Pvt Ltd, Adani Enterprises Ltd  and M/s Maharashtra State Electricity Transmission Co. Ltd and unknown officials of Public sector banks (SBI, PNB, Vijaya Bank, OBC, SBM and Canara Bank) to enquire into allegations of availing various credit facilities for procurement of power generation and power transmission equipment from vendors of South Korea, China etc through a UAE  based intermediary M/s Electrogen Infra (an Adani Group Company) which were allegedly imported by gross over-valuation/ over invoicing thereby siphoning of funds of various public sector banks.

“Another allegation was added during inquiry to look into the effect of exaggeration of project cost on fixation of tariff and also to avail excess finance from the bank to fulfil the requirement of margin money without an infusion of own capital”.

“The core issue of the said PE was pertaining to the transmission network which was within the Maharashtra state that is intra-State transmission system thus it was a project under the Government of Maharashtra. That for the reasons mentioned above no much progress could be made in the enquiry and the PE was closed on July 15, 2015 on the jurisdictional issue,” said the CBI.

Advocate Pranav Sachdeva, who has filed the PIL on behalf of Centre for Public Interest Litigation and Common Cause on the scam of over-invoicing of coal/ power equipment, said, “Shockingly CBI has said that they closed the PE against Adani and various public sector banks, only on the ground that matter somehow pertained to Maharashtra and they did not have permission of Maharashtra government. But this is not a correct legal understanding. While investigating the role of public sector banks, no state government permission is needed”.

The PIL threw light on the scam wherein Indian power companies are indirectly involved in over-invoicing to the extent of 400 percent on the import equipment/coal through their foreign intermediaries which is ultimately adversely affecting consumers, stakeholders and tax authorities.

On the high court’s query on CBI’s stand on new PE’s registered by it in cases involving NTPC, the CBI said it had registered another case on source information against one Ahmed A R Buhari, promoter of Coastal Energy Private Limited, Chennai and unknown officials of National Thermal Power Corporation (NTPC), Metals and Minerals Trading Corporation (MMTC) and Aravali power company Power Limited.

It said Buhari controls and manages several companies floated in Dubai, Singapore and Indonesia which adopts a modus operandi whereby coal of inferior specifications was imported and sold to NTPC, MMTC for coal of superior specifications in higher value.

APCPL and MMTC, in order to avoid submission of actual documents for obtaining the concessional rate of duty as per the notification of the centre wherein coal imports from Indonesia were granted concessional rate, did not avail the custom duty exemption for many consignments, it said.

During the period of 2011-12 and 2013-15, MMTC and APCPL imported 147 consignments by declaring inflated values and sold to NTPC on inflated amount.

As per DRI investigation over-invoicing of Rs 363 crores was done on the coal imported by MMTC and Rs 125 crores on the consignments imported by APCPL causing excess payment of Rs 487 crores proximately, the CBI said, adding that it has so far collected 47 files from NTPC and APCPL in this connection and since these files are voluminous in nature, they are being minutely scrutinized for investigation.

It also told the court that there is a requirement of collection of evidence like original coal supplier from Indonesia, testing agencies who had issued test reports of the coal are also being assessed and the investigation of the cases are at initial stage.

The CBI has also given details of another preliminary enquiry registered by it on October 25, 2017 on basis of written complaint of Ajith Kumar, Additional Director General of DRI Mumbai, against Knowledge Infrastructure Systems Private Limited, Knowledge International Strategy System Private Limited, Singapore, and unknown officials of Maharashtra State Power Generation Company Limited and unknown others wherein certain consignments of Indonesian coal imported by Knowledge Infrastructure Systems Private Limited from firms in Hong Kong and Singapore had in actuality been procured by Singapore-based wholly owned subsidiary.

Knowledge Infrastructure Systems Private Limited was required to supply coal to Maharashtra State Power Generation Company.

The CBI said it has recorded statements of various persons and collected copies of documents and the enquiry in the PE is in progress.