Delhi Court acquits AES Chhattisgarh Energy, its founding director in coal scam case

A Special Court in Delhi recently acquitted AES Chhattisgarh Energy Private Limited and its founding Director Sanjeev Kumar Aggarwal in a case involving allegations of cheating and criminal conspiracy related to the allocation of the Sayang coal block in Chhattisgarh in 2007 [CBI v. AES Chhattisgarh Energy Private Limited & Anr]..Special Judge Arun Bhardwaj of Rouse Avenue District Courts quashed the case filed by the Central Bureau of Investigation (CBI), in which it was alleged that the company had misrepresented that it was a 100 percent subsidiary of AES Corporation, USA when it applied for the coal block. The Court concluded that the accused had not cheated the Ministry of Coal for the allocation of the coal block in their favour as there was no misrepresentation when AES Chhattisgarh Energy referred to its subsidiary nature in the application.“Both the accused are therefore acquitted of all the charges framed against them i.e., under section 420 of IPC and under section 120 B IPC and 120 B IPC read with 420 IPC,” the Special Judge said..On examination of the material on record, the Court found that AES Corporation, USA through its subsidiary AES India Private Limited was controlling the composition of the board of directors of AES Chhattisgarh Energy Private Limited. The Court considered the CBI’s evidence that the accused company itself had informed the Registrar of Companies that it was not a subsidiary company of any other holding company. However, the Court said such an admission could be explained by looking into the Director’s report attached to the audited balance sheet which showed that AES Chhattisgarh Energy was an affiliate of AES India.“While examining the documents submitted by Accused No. 1 company with Registrar of Companies, this Director’s Report cannot be ignored. Whereas in the Form 23AC submitted on behalf of Accused No. 1 company, it mentioned that it is not a subsidiary of any other holding company, but in the Directors Report, it was made clear that accused No. 1 company is affiliate of AES India Private Ltd and will be implementing the project in terms of memorandum of understanding with Government of Chhattisgarh,” the Court noted..It concluded that the Director's report had made it clear that AES Chhattisgarh Energy is an affiliate and a subsidiary of AES India Private Limited. “It is obvious that it was a blatant mistake on the part of AES Chhattisgarh Energy Private Ltd to mention in its Form 23 AC that it is not a subsidiary of any holding company whereas it was subsidiary of AES Corporation, USA,” it added. In this context, the Court opined that there was gross negligence in the way the financial documents of the company AES Chhattisgarh Energy Private Ltd were prepared and submitted before the Registrar of Companies. Thus, the Court said the accused had suffered the trial for their own mistakes. However, it added that fortunately, they (the accused) produced all evidence available with them to show that AES Chhattisgarh Energy Private Ltd was a subsidiary of AES Corporation, USA..The Court also rejected the CBI’s case that AES Corporation had only later started mentioning AES Chhattisgarh Energy as its subsidiary in its Annual Reports. It accepted the explanation that the AES Corporation's Annual Report mentioned that the list of subsidiaries omits certain non-significant subsidiaries and that AES Chhattisgarh Energy was not a significant subsidiary till the end of 2006. Concluding that AES Chhattisgarh Energy was a 100 percent subsidiary of the US company, the Court said the charges against the accused were not proven."The accused are acquitted," it, therefore, ordered..Senior Advocate RS Cheema with Advocates AP Singh, Sanjay Kumar, NP Srivastava, VK Patha, Tarannum Cheema and Akshay Nagrajan represented the CBI.Senior Advocate Vikas Pahwa with Advocates Tanvir Ahmed Mir, Rajeev Goyal, Bishwajit Dubey, Gaurav Gupta, Surabhi Khattar, Ashutosh Singh, Dakshita Chopra, Prabhav Ralli, Nancy Shamim, Saud Khan and Shaurea Tyagi represented the accused..[Read Judgment]