Plea against over-invoicing by Power Companies in the Delhi HC

Centre for Public Interest Litigation and Common Cause have filed a PIL in the Delhi High Court seeking a SIT probe into the over-invoicing of power equipment and fuel by power generating companies like Adani and Essar..The matter came up for hearing before the Division Bench of Acting Chief Justice Gita Mittal and Justice C Hari Shankar. However, Justice Shankar recused himself from hearing the matter as he had represented some of these companies in the past..Appearing for the petitioners, Advocate Prashant Bhushan, submitted that this scam (of over-invoicing) runs into thousands of crores. He elaborated that five times the actual price, of power equipment and fuel, is being shown as cost by power companies, in order to siphon off money to their promoters’ companies, which are registered in tax havens abroad..He further stated that this is also done to inflate electricity tariffs which are primarily based on the cost of equipment and fuel..“The same has been unearthed by the Directorate of Revenue Intelligence (DRI) itself and detailed show-cause notices have been issued.” .The petition further alleges that,.“The siphoning of money amounts to cheating the shareholders and the tax authorities, in addition to cheating the consumers. The same may also be in violation of various laws like Customs Act, Foreign Exchange Management Act, Prevention of Money Laundering Act, etc..In the last three or four years, several major instances of such over-invoicing have been unearthed by DRI in which several prominent and influential companies are involved. The modus operandi is identical in all these cases. The coal or power equipment even though is shipped directly to India, but its invoicing is routed through a different company incorporated abroad which is directly owned and controlled by the promoters of the project in India.”.The petition also states that the DRI, in its alert issued to various authorities, had informed that the over-invoicing of coal imports by these companies was being done to siphon-off money abroad and to avail higher power tariff compensation based on artificially inflated cost of the imported coal..The CBI had registered a Preliminary Enquiry (PE) based on the DRI show-cause notice to Adani regarding over-invoicing of equipment imports. However, it is learnt that the CBI apparently closed the PE without even registering an FIR during the tenure of the then CBI Director Ranjit Sinha, who is himself facing investigation for subverting CBI investigations against various accused..The petitioners submitted that they have approached the Court as they are aggrieved by the inaction of the Government despite the DRI unearthing this mega illegality..The Central Government submitted that it opposes even issuance of notice in the writ petition since the same would jeopardize the entire power sector in the country..The matter will be next heard on September 20..Read the Petition: