Delhi High Court Stays SFIO Action Against Hero Electric
The Delhi High Court has directed Hero Electric to approach the Union Ministry of Heavy Industries by Dec. 12 to arrive at a settlement over the purported FAME-II fraud.
The Delhi High Court has kept in abeyance any action against Hero Electric Vehicles Pvt. over a purported FAME-II EV subsidy fraud, in what can be seen as relief for a company that was once India’s largest electric two-wheeler maker.
The Naveen Munjal-led EV maker can approach the concerned officer of the Union Ministry of Heavy Industries on or before Dec. 12 to arrive at a settlement amount, Justice CD Singh said in an order dated Dec. 4. A similar relief was extended to three other EV manufacturers, who were absolved of the alleged fraud after recovering the amount due.
Any investigation proceedings may be stayed till then, the Delhi High Court said.
On Dec. 2, NDTV Profit reported that India’s Serious Fraud Investigation Organisation had conducted search operations at the premises of Hero Electric, Okinawa Autotech and Benling India over FAME-II violations.
These cases arose from the fraudulent availing of EV subsidy amounting to Rs 297 crore. Of this, Rs 133.5 crore was claimed by Hero Electric alone.
However, an SFIO investigation has revealed that several restricted parts under the phased manufacturing programme were either directly or indirectly imported from China in violation of the FAME-II guidelines.
The scheme of Faster Adoption and Manufacturing of Electric Vehicles in India Phase-II was launched in 2019 and ran until March 2024 to promote electric and hybrid vehicles in what is now the world’s third largest automotive market. It stipulated manufacturing of some key components in India, for the vehicle to be eligible for subsidy.
What Was Said In Court
“The petitioner (Hero Electric) has failed to disclose the entire facts of the case as they had imported certain components of the electric vehicle from the foreign country and labeled them as made in India,” N Venkataraman, additional solicitor general of India appearing on behalf of the Union Ministry of Heavy Industries, said in the Delhi High Court.
“Such type of the act committed by the petitioner company is contrary to the FAME-II scheme as well as amounts to committing fraud to the Government of India.”
Senior Advocate Vikas Pahwa, appearing on behalf of Hero Electric, said the impugned orders have been passed without there being any wrong committed by his client which invites initiation of criminal proceedings.
“The impugned orders are in violation of the petitioner’s (Hero Electric) fundamental right as the respondent department (Ministry of Heavy Industries) failed to abide by its own policy and did not provide any opportunity to settle the controversy,” Pahwa said in court.
“The investigation is merely a method to recover the amount.”
To this, ASG Venkataraman said he does not have any objection to the possibility of a settlement. The matter has now been posted for hearing on Dec. 20.
