TaxTMI 
TaxTMI 
2020 (4) TMI 670
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....r Pradesh ElectricityReforms Transfer Scheme, 2000, the Uttar Pradesh State Electricity Board was divided on 14th January, 2000 into 3 Companies i.e. (i)Uttar Pradesh Power Corporation Limited, (ii) Uttar Pradesh Rajya Vidut Utpadan Nigam Limited, and (iii) Uttar Pradesh Hydro Power Corporation Limited. On 14th January, 2000 itself the employees working in the Uttar Pradesh State Electricity Board were assigned to the aforesaid three corporations established in pursuance of the Reform Scheme. In respect of all the employees working in these three power corporations, Uttar Pradesh State Power Sector Employees Trust was constituted on 29th April, 2000 under the provisions of the Provident Fund Act, 1952 to manage general provident fund, gratuity fund and pension fund of the employees of three electricity corporaions so consituted. 4. A Trust-deed was executed on 24th April, 2000 for creation of the Trust. As per trust deed, the aforesaid three funds namely, General Provident Fund, Gratuity Fund and Pension Fund created for the benefit of employees of three power corporations shall be called "Uttar Pradesh State Power Sector Employees General Provident Fund", "Uttar Pradesh State P....
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....radesh Corporation Contributory Provident Fund Trust were forwarded to the Trust office by all three Corporations which then were required to be invested by the Secretary (Trust) on the approval of Director (Finance) and trustee and in accordance with the directions issued from time to time by the Board of Trustees in various approved schemes. 11. On 08.05.2013, it was resolved by the Board of Trustees of the U.P. State Power Sector Employees Trust that the amount of the General Provident Fund would be invested in term deposits of the nationalised Banks for a period of 1 to 3 years. Further, it was resolved in the meeting of the Board of Trustees of the Uttar Pradesh State Power Sector Employees Trust on 21st April, 2014 that in case there were alternative investment avenues available which were as safe as investment in the Banks and offered more assured interests, they should be presented after contemplation and, if needed then the Director (Finance) should be duly authorised to take the services of investment advisor. 12. In pursuance of the aforesaid resolutions till October, 2016, Provident Fund amounts of the two Trusts were deposited in the Nationalised Banks in term....
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....ested in any of the institutions other than scheduled/unscheduled commercial banks, with ill intentions invested more than 50% of the amount in term deposit of DHFL, knowing well that it did not fall in the category of unscheduled commercial banks and it was an unsecured private institution. 17. It is also alleged that according to the records available, GPF contributions amounting to Rs. 2631.20 crores were invested in DHFL out of which only Rs. 1185.50 crores have been received by the trust office and an amount of Rs. 1445.70 crores plus interest is yet to be received. Similarly, an amount of Rs. 1491.5 crores of the Contributory Provident Fund was invested in the DHFL, out of which Rs. 669.3 crores have been received by the office of the trust and Rs. 822.2 crores plus ineterest is yet to be received.Thus, the total amount of Rs. 2267.90 crores (Principal Amount) and interest is yet to be received from the DHFL. 18. It is alleged that the then Director (Finance) and the Secretary Trust by not following the directives issued by the Government of India dated 2nd March, 2015 and investing more than 50% of the amount of employees' GPF and CPF in DHFL have committed the offence....
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.... Account or in any Scheduled Bank, and open account or accounts in such Bank or Banks for the purpose in the name of the fund, and such accounts shall be operated by the Director (Finance) of UPPCL and the Secretary of the Board. (c) All investments made or to be made as aforesaid shall be held in the name of the Fund." 23. Thus, according to the aforesaid Rule 22 the money of the Fund is to be invested in accordance with the provisions of Section 418 of the Companies Act, 1956 and in the manner prescribed by the Central Government from time to time in this behalf. It is also provided that the investments must be in accordance with the provisions laid down in the Income Tax Rules, 1962 and as may be prescribed by the RPFC. 24. Similarly, some of the provisions of UPPCL Contributory Provident Fund Rules, 2004 would be apt to make note of for disposal of the present bail applications. 25. Rule 14 provides for investment of the fund amount which reads as under:- "14.0 Investment (i) All moneys of the Fund shall be invested expeditiously not later than the close of the month of recovery subject to such directions the Board may give from time to time. The inve....
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....ssued by the Secretary of State for India in Council under the authority of an Act of Parliament ^14 [of the United Kingdom] and charged on the revenues of India; ^15 [or which ^16 [was] issued by the Secretary of State on behalf of the Governor-General in Council under the provisions of Part XIII of the Government of India Act, 1935];] (c)in stock or debentures of, or shares in, railway or other companies the interest whereon shall have been guaranteed by the Secretary of State for India in Council; ^15[or by the Central Government] ^15[or in debentures of the Bombay ^16[Provincial] Co-operative Bank Limited, the interest whereon shall have been guaranteed, by the Secretary of State for India in Council] ^13[or the State Government of Bombay]; 17 (d) in debentures or other securities for money issued, under the authority of ^18[any Central Act or Provincial Act or State Act], by or on behalf of any municipal body, port trust, or city improvement trust in any Presidency-town or in Rangoon Town, or by or on behalf of the trustees of the port of Karachi:] ^19[Provided that after the 31st day of March, 1948, no money shall be invested in any securities issued by or o....
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....date of contribution, receipt or accrual, as the case may be, either- (a) be deposited- (i) in a post office savings bank account, or (ii) in a special account to be opened by the company for the purpose in the State Bank of India or in a Scheduled Bank, or (iii) where the company itself is a Scheduled Bank, in a special account to be opened by the company for the purpose either in itself or in the State Bank of India or in any other Scheduled Bank; or (b) be invested in the securities mentioned or referred to in clauses (a) to (e) of section 20 of the Indian Trusts Act, 1882 (2 of 1882 ). (2) Notwithstanding anything to the contrary in the rules of any provident fund to which sub- section (1) applies or in any contract between a company and its employees, no employee shall be entitled to receive, in respect of such portion of the amount to his credit in such fund as is invested in accordance with the provisions of sub- section (1), interest at a rate exceeding the rate of interest yielded by such investment. (3) Nothing in sub- section (1) shall affect any rights of an employee under the rules of a provident fund to obtain advances from or to wi....
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....ns ('Public Financial Institutions' as defined under Section 2 of the Companies Act, 2013), which have a minimum residual maturity period of three years from the date of investment. Basel III Tier-I bonds issued by scheduled commercial banks under RBI Guidelines: Provided that in case of initial offering of the bonds the investment shall be made only in such Tier-I bonds which are proposed to be listed. Provided further that investment shall be made in such bonds of a scheduled commercial bank from the secondary market only if such Tier I bonds are listed and regularly traded. Total portfolio invested in this sub-category, at any time, shall not be more than 2% of the total portfolio of the fund. No investment in this sub-category in initial offerings shall exceed 20% of the initial offering. Further, at any point of time, the aggregate value of Tier I bonds of any particular bank held by the fund shall not exceed 20% of such bonds issued by that Bank. Rupee Bonds having an outstanding maturity of at least 3 years issued by institutions of the International Bank for Reconstruction and Development, International Finance Corporation and Asian Development Bank. Te....
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....and regulated by Reserve Bank of India. Listed (or proposed to be listed in case of fresh issue) units issued by Infrastructure Debt Funds operating as a Mutual Fund and regulated by Securities and Exchange Board of India. It is clarified that, barring exceptions mentioned above, for the purpose of this sub-category (f), a sector shall be treated as part of infrastructure as per Government of India's harmonized master-list of infrastructure sub-sectors: Provided that the investment under sub-categories (a), (b) and (f) (i) to (iv) of this category No. (ii) shall be made only in such securities which have minimum AA rating or equivalent in the applicable rating scale from at least two credit rating agencies registered with Securities and Exchange Board of India under Securities and Exchange Board of India (Credit Rating Agency) Regulation, 1999. Provided further that in case of the sub-category (f) (iii) the ratings shall relate to the Non-Banking Financial Company and for the subcategory (f) (iv) the ratings shall relate to the investment in eligible securities rated above investment grade of the scheme of the fund. Provided further that if the securities/entities have bee....
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....all not be in excess of 5% of the total portfolio of the fund at any point in time and the fresh investment in such mutual funds shall not be in excess of 5% of the fresh accretions invested in the year. Exchange Traded Funds (ETFs)/Index Funds regulated by the Securities and Exchange Board of India that replicate the portfolio of either BSE Sensex Index or NSE Nifty 50Index. ETFs issued by SEBI regulated Mutual Funds constructed specifically for disinvestment of shareholding of the Government of India in body corporates. Exchange traded derivatives regulated by the Securities and Exchange Board of India having the underlying of any permissible listed stock or any of the permissible indices, with the sole purpose of hedging. Provided that the portfolio invested in derivatives in terms of contract value shall not be in excess of 5% of the total portfolio invested in sub-categories (a) to (d) above. Minimum 5% and upto 15% (v) Asset Backed, Trust Structured and Miscellaneous Investments Commercial mortgage based Securities or Residential mortgage based securities. Units issued by Real Estate Investment Trusts regulated by the Securities and Exchange Board of I....
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.... National Housing Bank, a body constituted under the National Housing Bank Act, 1987 which gives due recognition to the housing finance Companies operational in India on the basis of several qualifying variables. He has further submitted that in December 2016, it was unanimously resolved by the Board of Trustees that in order to get best returns on the funds, the monies would be invested in the term deposits with Punjab National Bank Housing Company which yielded better returns than those offered by the banks. 34. The Secretary of the trust informed that better rates were offered by DHFL which was a AAA rated company and was also duly recognised by the National Housing Bank. Thereafter, an opinion was sought from all the trustees including the applicant. Learned counsel has submitted that role of the applicant was only to the extent of recommending on the financial health and viability of the DHFL. The applicant conducted an extensive research and found that the top investors of the DHFL were the various scheduled banks including State Bank of India and many other well recognised companies and investment funds. After making such exercise, he approved DHFL for investment. It is a....
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....inancial health, he had himself invested Rs. 20 lakh of his GPF fund in the said Company. Since the proceedings under the insolvency and bankruptcy code have been initiated against the DHFL, the accused-applicant has also filed this claim before the NCLT, Bombay. In view of the aforesaid, it has been submitted that the accused-applicant did not have any malafide intention in giving consent for investment of funds in DHFL. 38. Mr. V.K. Shahi, learned Additional Advocate General has submitted that the management and investment of the GPF/PPF amount of all the 42000 employees of the Power Corporation was required to be carried out in conformity with GPF Rules, 2000, CPF Rules, 2004 and the Gazette notification of Government of India dated 2nd March, 2015. These rules specifically provide that the investment is to be made in accordance with the rules and the notifications issued by the Government of India. He, therefore, has submitted that there is no substance in the submission of the learned counsel for the accused-applicant that the Government of India notification dated 2nd March 2015 has no application in respect of the two Trusts whose money was invested in DHFL. He has furthe....
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.... of Mr Sanjay Agrawal on the minutes of the alleged meeting of the Board of Trustees held on 24.03.2017 are forged and he did not append his signatures. 41. Thus, it is submitted that only theBoard of Trustees comprising of 10 members was empowered to take appropriate decisions with regard to investment of CPF and GPF amounts. However, the accused-applicant being Director (Finance),P.K. Gupta, (Secretary,Trust) and Mr. A.P. Mishra (Managing Director) of UPPCL and trustee in furtherance of criminal conspiracy and to earn illicit brokerage amount, without convening any meeting of the Board of trustees, carried out authorised and illegal investments of the provident fund amounts in clear breach and violation of the Rules and provisions of Indian Trust Act and Companies Act, Provident Funds and Miscellaneous Provisions Act, 1952 and Government of India notifications. 42. It has been further submitted that the amount of brokerage was transmitted from DHFL to 14 companies including Alpine Associates, a company run and operated by one Ashish Chaudhari, a close confidant of accused, Abhinav Gupta s/o Mr. P. K. Gupta. The brokerage amount was subsequently transferred to several other ....
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....e public money involved has held as under:- "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 35. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country." 48. In judgment rendered in the case of State of Bihar Vs. Amit Kumar (2017) 13 SCC 751, it has been held that while considering the bail involving socioeconomic offences stringent parameters should be applied. Paras 8-9 of the said judgment are extracted hereunder:- "8. A bare reading of the order impugned discloses that the High....
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....the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the 2002 Act. 22. It is not necessary to multiply the authorities on the sweep of Section 45 of the 2002 Act which, as aforementioned, is no more res integra. The decision in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : (2005) SCC (Cri) 1057] and State of Maharashtra v. Vishwanath Maranna Shetty [State of Maharashtra v. Vishwanath Maranna Shetty, (2012) 10 SCC 561 : (2013) 1 SCC (Cri) 105] dealt with an analogous provision in the Maharashtra Control of Organised Crime Act, 1999. It has been expounded that the Court at the stage of considering the application for grant of bail, shall consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commence....
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.... of Bihar v. Amit Kumar, (2017) 13 SCC 751 : (2017) 4 SCC (Cri) 771] . Thus, it is evident that the above factors must be taken into account while determining whether bail should be granted in cases involving grave economic offences. 25. As already discussed supra, it is apparent that the Special Court, while considering the bail applications filed by Respondent 1 both prior and subsequent to the filing of the investigation report and complaint, has attempted to account not only for the conditions laid down in Section 212(6) of the Companies Act, but also of the general principles governing the grant of bail. 26. In our considered opinion, the High Court in the impugned order has failed to apply even these general principles. The High Court, after referring to certain portions of the complaint to ascertain the alleged role of Respondent 1, came to the conclusion that the role attributed to him was merely that of colluding with the co-accused promoters in the commission of the offence in question. The Court referred to the principles governing the grant of bail as laid down by this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [Ranjitsing Brahma....