Delhi court says misrepresentation allegations baseless, acquits AES Chhattisgarh, its director in coal block allocation case


In a significant judgment last week, Special Judge Arun Bhardwaj of a Delhi court acquitted AES Chhattisgarh Energy Private Limited (AES Chhattisgarh) and its director, Sanjeev Aggarwal, in a coal block allocation case. The charges centered around alleged intentional misrepresentation and concealment of facts during the allocation process.

The court found that the prosecution had failed to prove its case as the evidence presented highlighted stark differences in corporate practices between the USA and India. Prof Jonathan Macey, a key witness, emphasised the legal anonymity of beneficial owners in the USA, contrary to Indian requirements under Section 187 C of the Companies Act, 1956.

Crucially, the court acknowledged that the relationship between the AES USA, and AES Chhattisgarh, though compliant with US laws, faced misinterpretation in India.

The court held that under Section 4 (6) of the Companies Act, 1956, AES Chhattisgarh should be treated as the subsidiary of AES USA.

This verdict sheds light on the need for a nuanced understanding of international corporate practices, emphasising that practices deemed legal in one jurisdiction may lead to misinterpretation elsewhere.

The implications of this judgment may extend to similar cases, urging a reassessment of alleged misrepresentation in the context of coal block allocations.

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