TaxTMI 
TaxTMI 
2020 (4) TMI 916
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.... investigation having been found fully involved 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....
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....entral Government from time to time. 10. The amount deducted from the salaries of the 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 inve....
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....ble in the office of trust from March, 2017 to December, 2018, the then Secretary (Trust) Mr. Praveen 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 Cont....
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....down in the Income Tax Rules, 1982 and as may be prescribed by the RPFC. (b) The Trustees may deposit such sums of money as are not invested in accordance 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 f....
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....o shall apply to investments made before the date aforesaid;] ^12[(bb) in India three and a half per cent. stock, India three per cent. stock, India two and a half per cent. stock or any other capital stock^13 [which before the 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 munici....
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.... provident fund has been constituted by a company for its employees or any class of its employees, all moneys contributed to such fund (whether by the company or by the employees) or received or accruing by way of interest or otherwiseto such fund shall, within fifteen days from the 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 ....
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....h investments made in them shall not exceed 5% of the fresh accretions in the year. Minimum 45%and upto 50% (ii) Debt Instruments and Related Investments Listed (or proposed to be listed in case of fresh issue) debt securities issued by bodies corporate, including banks and public financial institutions ('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 ....
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....ory. Infrastructure and affordable housing Bonds issued by any scheduled commercial bank, which meets the conditions specified in (ii)(d)above. Listed (or proposed to be listed in case of fresh issue) securities issued by Infrastructure debt funds operating as a Non-Banking Financial Company 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 th....
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....ded in either of the two stock exchanges. (b) Units of mutual funds regulated by the Securities and Exchange Board of India, which have minimum 65% of their investment in shares of body corporates listed on BSE or NSE. Provided that the aggregate portfolio invested in such mutual funds shall 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 subcategories (a) ....
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....f Punjab National Bank. P.N.B. Housing Finance offered rate of interest @ 7.2%. It has further been submitted that the aforesaid decision was in accordance with guidelines/notification of the Central Government dated 2nd March, 2015. There has been no mala fide intention on the part of the accused-applicant in agreeing to the proposal for investing in the P.N.B. Housing Finance Ltd. 33. It has been further submitted that the accused-applicant has tendered his resignation 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 Trus....
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....irector, Director (Finance) and Secretary of U.P.P.C.L. being trustees were under duty and responsibility to invest GPF and CPF contributions of the employees safely and in accordance with law. However, for the illicit purposes of earning brokerage amount, the accused-applicant in connivance with the Secretary, P. K. Gupta and Director (Finance), Mr. Sudhanshu Dwivedi invested GPF and CPF contributions of the employees in GPF and CPF Trusts illegally and unsafely invested in the shape 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 investment....
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....y transferred to several other firms through RTGS with the assistance of certain Chartered Accountants. The said firms in turn, for the purposes of justifying their proscribed money, made cash payments to several Chartered Accountants and the money after exchange of several hand, reached Abhinav Gupta s/o Praveen Kumar Gupta, Secretary (Trust). 40. Mr. Abhinav Gupta has stated in his statement before the investigating officer that a sum of approximately 30 crores was received as brokerage 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 ....
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....as been seeing an alarming rise in whitecollar crimes, which has affected the fibre of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal [(1987) 2 SCC 364 : 1987 SCC (Cri) 364] this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under: (SCC p. 371, para 5) "5. ... The entire community is aggrieved if the economic 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 interes....
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....lleged to be the kingpin/ringleader. Further, it is alleged that the respondentaccused is involved in tampering with the answer sheets by illegal means and interfering with the examination system of Bihar Intermediate Examination, 2016 and thereby securing top ranks, for his daughter and other students of Vishnu Rai College, in the said examination. During the investigation when a search team raided his place, various documents relating to property and land to the tune of Rs 2.57 crores were recovered besides Rs 20 lakhs in cash. In addition to this, allegedly 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....
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....oted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy [Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439 : (2013) 3 SCC (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 whic....