A LR is a formal request from one country to another under the Mutual Legal Assistance Treaty (MLAT) seeking judicial assistance in accessing information on an offshore entity in connection with an ongoing probe.A LR is a formal request from one country to another under the Mutual Legal Assistance Treaty (MLAT) seeking judicial assistance in accessing information on an offshore entity in connection with an ongoing probe.

Last year, AEL moved the Bombay High Court seeking to quash all LRs issued by the agency in 2017 to countries including Singapore against Adani Group firms being probed for alleged overvaluation of Indonesian coal imports. The High Court had, in September 2018, given an interim stay to AEL. The DRI moved the Supreme Court as its probe came to a halt. The apex court has now directed the High Court to decide the case by the end of this month.

The DRI affidavit said that AEL 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 Adani Group’s “blatant” hike in prices of imported coal for “siphoning” money and “increasing” the cost of power sold to public in India.

When contacted, a spokesperson for the Adani Group said, “Since the matter is subjudice, we are refrained from making any statement.” DRI too declined to comment.

The legal battle assumes significance as apart from the Adani Group, the DRI is probing at least 40 companies including two companies of the Anil Dhirubhai Ambani Group (ADAG), two Essar Group firms and a few public sector power firms for alleged overvaluation of coal imports from Indonesia pegged at Rs 29,000 crore between 2011 and 2015. So far, the DRI has issued 14 LRs to multiple foreign jurisdictions such as Singapore, Hong Kong, Switzerland, UAE among others seeking information in the alleged over-valuation of imports of Indonesian coal.

The outcome of this case could impact investigation by other agencies such as the Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO), as they often use LRs to seek information from foreign jurisdiction.

In its petition to the Bombay High Court, AEL has claimed the LRs were issued by DRI without cognisance of any offence or registering of First Information Report (FIR) against the Adani firms in the coal case. It also said that the LRs were issued without any notice and hearing the companies.

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The DRI affidavit, however, said an investigation by the Customs officers, ED officers, Wildlife Crime Control officers and the officers of SFIO under the Customs Act, Prevention of Money Laundering Act, Wildlife (Protection) Act and the Companies Act respectively, “does not commence by registering FIRs or by seeking an order from a Magistrate unlike the police officers.” Therefore, under the Customs Act, an FIR under the Code of Criminal Procedure or magisterial intervention is not required for initiation of customs investigation, it said.

“AEL has frivolously invoked unrelated and inapplicable principles such as fundamental rights to cast aspersions on a diligently followed investigation procedure adopted by the DRI,” said the affidavit.

The DRI has said that the Customs Act 1962 is a self-contained law to deal with smuggling of goods and even the legislature has made it evident that magisterial intervention is not required for initiating a probe under the customs rules.

The DRI probe against Adani and other companies commenced after the agency issued a general alert to its field formations across India in March 2016, outlining the modus operandi of over-invoicing of coal imports from Indonesia. DRI alleged the money was being “siphoned” outside the country and the electricity-generating firms were availing of “higher tariff compensation based on artificially inflated cost of the imported coal”.