TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 916
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....ed in the scam. 3. As per the FIR, in pursuance of the implementation of the Uttar Pradesh Electricity Reforms 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 corporations so constituted. 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 ....
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....member employees of the Uttar Pradesh State Power Sector Employees Trust and the Uttar Pradesh 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 nationalized 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 authorized to take the services of investment advisor. 12. In pursuance of the aforesaid resolutions till October, 2016, Providen....
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.... Kumar Gupta who was in charge of both C.P.F. and G.P.F. Trust after obtaining approval from the then Director (Finance), Mr. Sudhanshu Dwivedi and the present accused-applicant who was working as Managing Director of U.P.P.C.L. and transgressing the clear directives of the Government of India as contained in its notification dated 2nd March, 2015 according to which clear directions were issued that the moneys of the employees Provident Fund should not be invested 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 fully 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 th....
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....ance with subrule (a) above or are required for day to day needs of the Fund in a Post Office Saving Bank 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." 22. 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. 23. 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. 24. 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 mont....
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....15th day of August, 1947, was] issued 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 ....
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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 subsection (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 withdraw money standing to....
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.... 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. Term Deposit receipts of not less than one year duration issued by scheduled....
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....ed 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 sub- category (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 been rated by more than two rating agencies, the two lowest of all the ratings shall be considered. Provided furt....
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.... 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 subcategories (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 India. Asset Backed Securities regulated by the Securities and Exchange Board of India. Units of Infrastructure Investment Trusts regulated by the Securities and Excha....
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....on 16th March, 2017, however, the same was accepted by His Excellency, Governor of U.P. only on 23.03.2017. The accused-applicant had no knowledge of the investment of funds in D.H.F.L. It has further been submitted that the decision to invest in D.H.F.L. is taken by circulation/rotation in the minutes of meeting which has been placed before the applicant in his office on 22.03.2017. 34. It is further submitted that the decision to invest in the DHFL was approved by the Board of trustees in its meeting held on 22-24th April 2017 in which Mr Sanjay Agrawal, Chairman UPPCL and Trust, Mr. A.P. Mishra, (the accused-applicant) Managing Director, UPPCL, Mr. Satya Prakash Pandey, Director (P & A) U.P.P.C.L. and Trustee, Mr Sudhanshu Dwivedi, the Director (Finance) and Mr. P. K. Gupta, General Manager (F & A,) Secretary (Trust) were present. It is further submitted that all these persons had signed the resolution. It is said that Sanjay Agrawal was the Chairman who signed the resolution but he has not been made the accused as he is an influential person. It is further submitted that the decision on investment was not taken with a mala fide intention and, there is nothing in evidence which....
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....hape of FDRs in DHFL, a company with ulterior motive to earn illicit brokerage from DHFL. 37. It has been further submitted that the decisions regarding investment of PF amount, could have been taken only by the Board of trustees, however, in the instant case no meeting of Board of trustees was convened and on 17th December, 2016. The applicant, Mr, Praveen Kumar Gupta and Mr. Sudhanshu Dwivedi, co-accused took a decision for investment of provident fund amount in PNB Housing Finance without any authority of law to earn illicit brokerage. Subsequently, the investment was made in LIC Finance Company in defiance of the provision of law and stipulation. In the same series on 16th March 2017, the investments were unlawfully made in DHFL. To ratify the investments so made and in furtherance of illegal and malafide designs, allegedly a meeting of the Board of trustees was convened on 24th March, 2017 by circulation. The minutes of the said meeting were also found to be false, forged and fictitious. Mr Sanjay Agrawal, a senior IAS official has mentioned in his statement that his alleged signatures on the minutes of meeting, allegedly convened on 24th March, 2017 are forged and fictitious....
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....age from C.A., Lalit Goyal and, the said amount was divided amongst the present accused-applicant, Director (Finance) and P.K.Gupta (Secretary,Trust). A copy of the statement given by accused, Abhinav Gupta has been placed on record with the counter affidavit. 41. I have considered the submissions and the provisions of the relevant rules and the Acts carefully. 42. The investments were made on 16th March, 2017 without there being any authorization of the Board of Trustees, but to justify the investment forged minutes of meeting allegedly held on 24th March, 2017 were prepared on which signature of the Chairman, Mr Sanjay Agrawal were forged. Statement of Abhinav Gupta s/o Praveen Kumar Gupta has prima facie disclosed that the brokerage amount of Rs.30 crores was given by DHFL for making investment and this brokerage amount was divided among three accused. The acts of commission and omission of the accused along with other coaccused have caused huge loss to the two trusts created for the welfare of poor 42000 employees of the threee electricity corporations out of their hard earned money. 43. The economic crime of such scale and magnitude are carefully and meticulously planned an....
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....mic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest." 24. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the pu....
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....gedly a large number of written answer sheets of various students, letterheads and rubber stamps of several authorities, admit cards, illegal firearm, etc. were found which establishes a prima facie case against the respondent. The allegations against the respondent are very serious in nature, which are reflected from the excerpts of the case diary. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the credibility of the education system of the State of Bihar." 47. Further, the aforesaid view has been reiterated in the case of Rohit Tandon vs Directorate of enforcement (2018) 11 SSC 46. Paras 21 and 22 of the aforesaid judgement read as under:- "21. The consistent view taken by this Court is that 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. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden o....
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....(Cri) 552] : (SCC p. 449, paras 34-35) "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. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations." This Court has adopted this position in several decisions, including Gautam Kundu v. Directorate of Enforcement [Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1 : (2016) 3 SCC (Cri) 603] and State of Bihar v. Amit Kumar [State of Bihar v. Amit Kumar, (2017) 13 SCC 751....