11 Oct 2023 3:50 AM GMT
The Supreme Court on Tuesday (10 Oct) directed that the case of Directorate of Revenue Intelligence(DRI) v. Adani Enterprises Ltd would be heard along with the case of Senior Intelligence Officer v. Sanjay Agarwal where 2 questions framed earlier by the Supreme Court have relevance in the present case.
Those 2 questions are as follows-
The Court observed “Our attention is invited by the learned Additional Solicitor General to the order dated 04.07.2023. The concerned Bench has formulated four questions in paragraph ‘3’ of the order dated 04.07.2023, we find that questions (iii) and (iv) will have relevance in this case. Hence, we direct that this special leave petition shall be heard along with SLP(Crl.) No. 4821 of 2023. Both the matters be placed before the appropriate Bench.”
The Supreme Court bench comprising Justices Abhay S. Oka and Justice Pankaj Mithal was hearing an appeal filed by the DRI against a judgment delivered by the Bombay High Court in October 2019 which had quashed and set aside the action taken by the petitioner in giving effect to the letter of Rogatory issued by the Metropolitan Magistrate, Mumbai in relation to the import of coal of Indonesian origin by the respondent.
In the present case, the Directorate of Revenue Intelligence (DRI) had initiated an investigation into Adani Enterprises(respondent), accusing the company of grossly overstating the import value of Indonesian coal compared to the actual export value and international market prices.
The majority of the imports came to be routed through their group subsidiary company i.e. Adani Global Private Limited (AGPTE), Singapore, and Adani Global (AGFZE), Dubai during 2010-2016.
It was alleged that this was done in collusion with individuals and companies to siphon off money abroad while seeking higher power tariff compensation to sell power to Indian public sector undertakings.
The DRI's allegations included offenses punishable under Section 132 and Section 135 of the Customs Act, 1962, related to knowingly misdeclaring the value of goods and violations of the Act's provisions, respectively. Requisitions were issued under Section 108 of the Customs Act to obtain documents and information regarding the purchase and sale of Indonesian coal by Adani's subsidiary companies in Singapore and Dubai.
However, Adani Enterprises responded by asserting that Adani Global Private Limited (AGPTE) and Adani Global (AGFZE) were independent legal entities incorporated abroad and suggested that the DRI communicate directly with them. When no response was received from these entities, the DRI sought recourse under Section 166-A of the Code of Criminal Procedure (CrPC) by approaching the Addl. Chief Metropolitan Magistrate, Mumbai, to issue a Letter of Rogatory to authorities in Singapore, the UAE, Hong Kong, and the British Virgin Islands to obtain information. After examination, the Letter of Rogatory to Singapore was issued on 2/8/2016 and forwarded to the competent authority in Singapore.
Against this, the respondent filed a petition before the Bombay HC.
The issue before the Bombay High Court was twofold: Whether the DRI's investigation against Adani Enterprises under Section 135 of the Customs Act was legally valid and whether the DRI was justified in invoking Section 166-A of the CrPC to issue the Letter of Rogatory.
The Bombay HC held that in the absence of a specific procedure outlined for the investigation of such offenses under the Customs Act, recourse must be made to Section 154 (for cognizable offenses) and Section 155 (for non-cognizable offenses) of the CrPC.
The HC observed “In the absence of any procedure being prescribed for investigation of such offenses under the special enactment, recourse must necessarily be had to sub-section (2) to Section 4. The necessary sequitur is that in case of an offense that is made cognizable under the Customs Act, the procedure contemplated under Section 154 and in case of an offence that is non-cognizable, the procedure under Section 155 would thus become imperative. Sub-section (2) of Section 4 which acts like an exemplar would govern the manner of investigation under the Customs Act by the provisions contained in the Code of Criminal Procedure in absence of any special provision in the Customs Act prescribing the manner of investigation.”
The Bombay HC relied on Directorate of Enforcement v. Deepak Mahajan (1994) 3 SCC 440 which had reiterated the view taken earlier that the Officer of Enforcement or a Customs Officer is not a police officer though such officers are vested with the powers of arrest or analogous powers by making reference to Ilias v. Collector of Customs, Madras (1969) 2 SCR 613.
In Deepak Mahajan’s case, it was held that “the operation of Section 4(2) of the Code is straightaway attracted to the area of investigation, inquiry, and trial of the offences under the special laws including the FERA and Customs Act and consequently Section 167 of the Code can be made applicable during the investigation or inquiry of an offence under the special Acts also inasmuch as there is no specific provision contrary to that excluding the operation of Section 167.”
The Bombay HC noted that though the Customs Act, 1962 classifies the offense punishable thereunder as cognizable/non-cognizable, it does not lay down any set of procedures for dealing with the information received by the Customs Officer for proceeding under the provisions of the Act
Finally, the Bombay HC held that “Section 166A is not an independent island on which any investigating/inquiring authority can jump on without taking recourse to Section 154/155, we hold and declare that the action of the respondents in giving effect to the letter of Rogatory issued by the learned Metropolitan Magistrate, Mumbai in relation to the import of coal of Indonesian origin cannot be sustained and it deserves to be quashed and set aside.”
Aggrieved by the same, the DRI approached the Supreme Court.
Case title: Directorate of Revenue Intelligence v. Adani Enterprises
Case : SLP(Crl) No.-010683 / 2019