The Madras High Court on Wednesday ordered the Central Bureau of Investigation (CBI) to conduct an investigation into allegations of fraud reaching $397 crore in procurement of distribution transformers by the Tamil Nadu Generation and Distribution Corporation (Tangedco) during the tenure of DMK’s V Senthil Balaji as the state’s electricity minister between 2021 and 2023.
A bench of Chief Justices SA Dharmadhikari and G Arul Murugan ordered the state Directorate of Vigilance and Anti-Corruption (DVAC), which had been investigating the matter so far, to “hand over” all papers and records related to the case to the CBI.
The authority also said that the Iraqi Central Bank should conduct its investigation “seriously and expeditiously.”
The Supreme Court issued directions on a Public Interest Litigation (PIL) filed by Chennai-based NGO and anti-corruption group ‘Arappor Iyakkam’, and a separate plea by AIADMK member E Saravanan, seeking an independent probe into the case.
The petitioners had told the Supreme Court that Tangedco had falsified the value of the tenders $1,182.88 crore to procure 45,800 transformers for the state.
They claimed that the tender process showed signs of cartelization, with bidders fixing prices in advance and eliminating competition.
Suresh’s lawyer Arapor Iakam told the court that in seven out of 10 bids, more than 30 companies offered exactly the same price, down to “identical decimal points,” citing the NGO’s analysis.
He said that after negotiations, these companies reduced their prices by approximately the same margin. Such consolidation is “close to zero probability” in a competitive market and means some collusion among bidders, Suresh said.
The petitioners alleged that Tangedco purchased transformers at prices up to 50% higher than the prevailing market prices, causing a loss of about 50% of the market prices. $397 crores to the state exchequer.
The NGO also informed the court that it had filed a complaint with the Domestic Violence Commission in July 2023 seeking a detailed investigation, but the agency had not registered any case even after more than 30 months.
It sought an independent investigation under the supervision of the court and appointed Senthil Balaji, former Tangedco chairman Rajesh Lakhone, and Controller (Procurement) V Kasi as key officials involved in the decision-making process.
During the previous hearings, the court asked DVAC to submit a status report on its preliminary investigations and called for the preparation of minutes of tender committee meetings.
The authority also questioned how state officials could liquidate contracts of this size despite clear red flags in pricing patterns.
But the state government denied these accusations.
She also said that the petition was filed with an ulterior motive by people belonging to other political parties as the election date approached, and urged the court to dismiss the petitions.
