Recently, the Supreme Court issued a directions to combined the case of Directorate of Revenue Intelligence (DRI) v. Adani Enterprises Ltd with the case of Senior Intelligence Officer v. Sanjay Agarwal. This decision was made because the Supreme Court identified two pertinent questions previously framed by the Court that hold relevance in the ongoing case.

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.”

Case Brief -

The division bench comprising Justices Abhay S. Oka and Justice Pankaj Mithal was hearing an appeal filed by the DRI challenging the judgement of the Bombay High Court, 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) initiated an investigation into Adani Enterprises (the respondent), alleging that the company had significantly inflated the import value of Indonesian coal in comparison 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.

The allegation in this case is that Adani Enterprises, in collaboration with certain individuals and companies, artificially inflated the import value of Indonesian coal. This alleged action was purportedly carried out to divert funds overseas while simultaneously seeking increased power tariff compensation for selling power to Indian public sector undertakings.

The allegations made by the Directorate of Revenue Intelligence (DRI) in this case encompassed offenses that fall under Section 132 and Section 135 of the Customs Act, 1962. These allegations pertained to knowingly misrepresenting the value of goods and contraventions of the Act's provisions, respectively.

To gather information and documents related to the purchase and sale of Indonesian coal by Adani's subsidiary companies in Singapore and Dubai, the DRI issued requisitions under Section 108 of the Customs Act. This section empowers the authorities to request such information and documents to aid in their investigations and enforcement of customs laws.

In response to the DRI's requisitions for information regarding Adani Enterprises' subsidiary companies, Adani Enterprises argued that Adani Global Private Limited (AGPTE) and Adani Global (AGFZE) were distinct legal entities incorporated abroad. They suggested that the DRI should communicate directly with these entities.

However, when the DRI did not receive a response from AGPTE and AGFZE, they pursued legal action under Section 166-A of the Code of Criminal Procedure (CrPC). Under this section, they approached the Additional Chief Metropolitan Magistrate in Mumbai to issue a Letter of Rogatory. This Letter of Rogatory was intended to request assistance from authorities in Singapore, the UAE, Hong Kong, and the British Virgin Islands in obtaining the necessary information.

Upon examination, the Letter of Rogatory directed towards Singapore was issued on 2nd August 2016 and subsequently forwarded to the competent authority in Singapore for execution. This legal process was pursued to gather essential information related to the case.

Against this, the respondent filed a petition before the Bombay HC.

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.”

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

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