The Delhi High Court on Friday gave nod to the Serious Fraud Investigation Office (SFIO) to continue its investigation against Hero Electric Vehicles in a case related to alleged misappropriation of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) subsidy scheme by the company.
The clearance came after Justice CD Singh was informed that that the settlement talks between Hero Electric and the Union Ministry of Heavy Industries have failed and that the government has rejected the settlement proposal put forth by the company.
On December 4, the court had allowed Hero Electric to resolve its dispute with the Ministry by asking it to approach the official concerned with a proposal on or before December 12. The court had also asked the Ministry to submit a report thereafter regarding the resolution with the company. Till then, the SFIO was asked not to proceed with its probe.
Hero Electric and its director Naveen Munjal had moved the HC challenging the Ministry of Corporate Affairs’ order for an SFIO probe against the company. Earlier this month, the SFIO had allegedly found three companies engaged in manufacturing electric vehicles, including Hero Electric Vehicles, of availing undue subsidies to the tune of INR 297 crore under the FAME II scheme.
The Ministry had asked the company to return incentives worth INR 133 crore with interest for alleged violation of FAME II norms.
However, the company had contested the claims and sought release of INR 570 crore as pending subsidy against sales already made.
Additional Solicitor General N. Venkataraman, appearing for the Ministry of Heavy Industries, had earlier argued that Hero Electric’s case should be dismissed for forum shopping as a case on a similar issue was pending before the Punjab and Haryana High Court.
In the probe ordered by the corporate ministry in September, the SFIO allegedly found that Hero Electric had claimed subsidies through questionable compliance with the applicable guidelines as several of those parts were either directly or indirectly imported from China, the ASG said.
Hero Electric told the HC that this is a “classic case where a pure civil dispute has been given a taint of criminality” to gain an advantage in a pending civil dispute filed by it in the Punjab and Haryana HC.
The company had approached the Punjab & Haryana High Court against a blacklisting and deregistration order passed by the Ministry on allegations of non-compliance with the FAME-II policy, launched in 2019 to promote manufacturing of electric and hybrid vehicles in India.
Hero also told the HC that SFIO had already raided and sealed its plant. “Clearly, the present proceedings are merely to recover subsidies legitimately given to the company by giving a cloak of criminality to a purely civil dispute on the pretext of ‘public interest’,” said the petition.
After a probe directed by the Minister of Heavy Industries, its joint secretary had given a finding that the policy had “prolific ambiguities/inconsistencies wherein terms were not defined, unrealistic timelines were given, the policy was selectively applied and it is the Ministry who have to be blamed as the policy gave enough opportunity of contradictory interpretations,” said the company’s plea.
