Allahabad High Court
Abhinav Gupta vs State Of U.P. Thru. C.B.I./A.C.B., ... on 8 October, 2020
Author: Dinesh Kumar Singh
Bench: Dinesh Kumar Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 9 Case :- BAIL No. - 6070 of 2020 Applicant :- Abhinav Gupta Opposite Party :- State Of U.P. Thru. C.B.I./A.C.B., Lucknow Counsel for Applicant :- Purnendu Chakravarty Counsel for Opposite Party :- A.S.G. Hon'ble Dinesh Kumar Singh,J.
1. Present application under Section 439 Cr.P.C. has been filed seeking bail in FIR No.540 of 2019: RC No.0062020A0005 under Sections 409, 420, 467, 468, 471, 120B IPC, 7A and 8 of the Prevention of Corruption Act, 1988, Police Station CBI/ACB, Lucknow.
2. On 2nd November, 2019, the aforesaid FIR came to be registered on the complaint of one I.M. Kaushal, Secretary, Trust of Uttar Pradesh Power Corporation Limited (hereinafter referred to as "U.P.P.C.L.") against the father of the accused-applicant, Mr. Praveen Kumar Gupta, ex-Secretary (Trust) and Mr. Sudhanshu Dwivedi, who served U.P.P.C.L. in the capacity of Director (Finance) from June 2016 to June 2019. However, name of the accused-applicant who is the son the accused-Praveen Kumar Gupta and several other accused have been added during the course of investigation having been found fully involved in the mega 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 the 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 Power Sector Employees Gratuity Fund" and "Uttar Pradesh State Power Sector Employees Pension Fund". These funds collectively would be referred to as ''Funds'.
5. As per the Trust-deed, the funds vest in Board of Trustees who shall administer the Funds in accordance with the Rules as set out in the Schedule of the Trust-deed. The First Trustees are:
(i)''Chairman cum Managing Director, U.P.P.C.L.' Chairman of the Trust;
(ii) ''Chairman cum Managing Director of U.P.R.V.U.N.L.' Member; and
(iii) ''Chairman cum Managing Director, U.P. Hydro Power Corporation Ltd.', Member.
6. The other Trustees are to hold office on appointment by nomination or otherwise, in the manner as provided in the Uttar Pradesh State Power Sector Employees General Provident Fund Rules, 2000.
7. Clause 7 of the Trust-deed reads as under:-
"7. That the trustees of the Board shall hold the ''Funds' and the amounts accruing in Trust for the Members and beneficiaries of the said ''Funds' and shall administer and apply the same in accordance with these presents and the Rules, nevertheless subject to the Provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the Schemes framed thereunder, and the Income Tax Act, 1961 and the Income Tax Rules, 1962."
8. For the management of provident fund of the employees joining the U.P.P.C.L. on 14.01.2000 or later, Uttar Pradesh Power Corporation Contributory Provident Fund Rules, 2004 were enacted and made applicable with effect from 1st April, 2004. Uttar Pradesh Power Corporation Contributory Provident Trust (hereinafter referred to as "CPF") was constituted on 25th June, 2006 under the Provident Fund Act, 1952.
9. Appropriation and the management of Provident Funds of the employees of the Uttar Pradesh State Power Sector Employees Trust and the Uttar Pradesh Corporation C.P.F. Trust were the responsibility of Secretary (Trust) and Director (Finance) U.P.P.C.L. The management and appropriation and other related actions with respect to provident funds account of the employees were to be performed by the Secretary (Trust) and Director (Finance) of both the Trusts in accordance with the directions issued by the Central 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 deliberations and considerations 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, Provident Fund amounts of the two Trusts were deposited in the Nationalized Banks in term deposits accruing interest.
13. However, in the month of December, 2016 on the proposal of the then Secretary of the Trust, Mr. Praveen Kumar Gupta, after obtaining the approvals from the then Director (Finance), Mr. Sudhanshu Dwivedi and the then Managing Director, U.P.P.C.L., Mr. A.P. Mishra who was working as Managing Director, U.P.P.C.L., started investing the G.P.F. and C.P.F. funds in the P.N.B. Housing term deposits. In the same series, the G.P.F. and C.P.F. funds were invested as term deposits by Mr. Sudhanshu Dwivedi and Mr. Praveen Kumar Gupta from March, 2017 in a private institution named Deewan Housing Finance Ltd (hereinafter referred to as ''DHFL') with the approval of the Managing Director, U.P.P.C.L. Mr. A.P. Mishra without any authority of law in illegal and mala fide manner for personal gains. Mr.A.P. Mishra granted approval for investing the amount of two Funds in NBFC with sole purpose of earning illegal brokerage by the accused.
14. It is further alleged that appropriation of funds was not done in accordance with the notification dated 2nd March, 2015 issued by the Ministry of Finance, Government of India. It is further alleged that according to the aforesaid notification, the funds of non Government Provident Fund could have been invested in the unscheduled commercial banks to the maximum limit of 50%.
15. It is alleged that the forged and fabricated minutes of the meeting of the Board of Trustees of the Contributory Provident Fund allegedly held on 24th March, 2017 were prepared to justify the illegal investment of money from two funds in DHFL. In the aforesaid meeting, it was allegedly resolved that "the Board of Trustees agreed to consider the investment proposals as per the government notification dated 2nd March, 2015 in the securities with higher security and high interest rates other than deposits of nationalized banks in AAA rated Companies. As per prevailing practice, further investment and the securities would be decided by Secretary (Trust) on the case to case basis with the consent/approval of Director (Finance), U.P.P.C.L. trustee."
16. It has been alleged that as per record available 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 Mr.A.P. Mishra 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 which specifically provide 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 the office of the trust and Rs.822.2 crores plus interest is yet to be received. Thus, the total amount of Rs.2267.90 crores (Principal Amount) and interest could not be received from the DHFL and DHFL itself has gone in liquidation.
18. Thus, allegations in sum and substance are that the accused in furtherance of criminal conspiracy with malafide intention for personal gain and in violation of the relevant provisions of law, have invested huge amount of two funds i.e. Uttar Pradesh Power Sector Employees General Provident Fund and Uttar Pradesh Power Corporation Limited Contributory Provident Fund in DHFL, a company incorporated under the Companies Act. Their malafide decision has caused huge loss to these funds to the extent of Rs.2267.9 crores (Principal Amount) besides interest. The investigation has revealed that the investments have been made in the DHFL by the accused for personal gain as they have received huge amount from DHFL as commission for making such investments.
19. The aforesaid two trusts were created under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and rules made thereunder as well as the provisions of Indian Trust Act, 1882.
20. Rule 11 of the Uttar Pradesh State Sector Employees General Provident Fund Rules 2000 which provides power and function of the secretary of the Trust reads as under:-
"(a) The Company Secretary of the UPPCL shall function as the Secretary of the Board.
(b) The Secretary will be assisted by such staff for the efficient discharge of his function as the Board may decide.
(c) The Director (Finance) of UPPCL and the Secretary of the Board shall jointly operate the accounts of the Fund."
21. Rule 22 provides investment of the Assets of the fund which reads as under:-
"22.Investment of the Assets of the Fund:
(a) The trustees shall, subject to the Provisions contained herein invest all money of the Fund, 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, so however, that the securities in which the money is invested shall be payable in India both in respect of capital and interest.
Provided that the investments must be in accordance with provisions laid 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 sub-rule (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 take note of for disposal of the present bail application.
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 month of recovery subject to such directions the Board may give from time to time. The investments shall be in the securities mentioned or referred to in clause (a) to (d) of Section 20 of the Indian Trust Act, 1882 (II of 1882), provided that such securities are payable both in respect of capital and in respect of interest in India and in such other securities as the Central Government may from time to time approve in this regard. Furthermore guidelines issued by the Ministry of Finance and Ministry of Labour regarding investment pattern shall be followed for making investment.
(ii) All expenses incurred in respect of, and loss, if any, arising from any investment shall be charged to the Fund."
25. Thus, 2004 Rules are Pari materia provisions with the 2000 rules.
26. Section 20 of the Indian Trust Act, 1982 postulates that the investment shall be made in the security satisfying clause (a) to (d) for investment of Trust money reads as under:-
"20. Investment of trust-money.--Where the trust property consists of money and cannot be applied immediately or at an early date to the purposes of the trust, the trustee is bound (subject to any direction contained in the instrument of trust) to invest the money on the following securities and on no others:--
(a) in promissory notes, debentures, stock or other securities 3 [of any 4 [State Government] or] of the 5 [Central Government], or of the United Kingdom of Great Britain and Ireland: 6 [Provided that securities, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such Government, shall be deemed, for the purposes of this clause, to be securities of such Government;
(b) in bonds, debentures and annuities 7 [charged or secured by the 8 [Parliament of the United Kingdom] 9 [before the 15th day of August, 1947] on the revenues of India or of the 10 [Governor-General in Council 11 ] or of any Province 11 ]: 12 [Provided that after the fifteenth day of February, 1916, no money shall be invested in any such annuity being a terminable annuity unless a sinking fund has been established in connection with such annuity; but nothing in this proviso 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 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 on behalf of a municipal body, port trust or city improvement trust in Rangoon Town, or by or on behalf of the trustees of the port of Karachi;]
(e) on a first mortgage of immovable property situate in 20[any part of the territories to which this Act extends]: Provided that the property is not a lease hold for a term of years, and that the value of the property exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the mortgage-money; 21[***] 22[(ee) in units issued by the Unit Trust of India under any unit scheme made under section 21 of the Unit Trust of India Act, 1963 (52 of 1963); or]
(f) on any other security expressly authorized by the instrument of trust, 22[or by the Central Government by the notification in the Official Gazette] or by any rule which the High Court may from time to time prescribe in this behalf: Provided that, where there is a person competent to contract and entitled in possession to receive the income of the trust property for his life, or for any greater estate, no investment on any security mentioned or referred to in clauses (d), (e) and (f) shall be made without his consent in writing."
27. Section 418 of the Companies Act, 1956 provides that the amount of provident fund shall be deposited in the post office, State Bank of India or in a Nationalised Schedule Bank. The aforesaid provision is applied to safeguard the provident fund deposits of the employees. However, it has been alleged that in clear departure from the statutory provisions, the accused for the purpose of earning illicit brokerage, deposited the provident funds amounts in DHFL, a private entity and such investment was completely unsafe and hazardous. As a consequence of the illegal decisions and actions of the accused, Rs. 2267.90 crores (Principal Amount) and interest of the provident funds of the employees have been dishonestly misappropriated.
28. Section 418 of the Companies Act 1956 is reproduced here under:-
"418. Provisions applicable to provident funds of employees.
(1) Where a 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 otherwise to 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 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 withdraw money standing to his credit in the fund, where the fund is a recognised provident fund within the meaning of clause (a) of section 58A of the Indian Income- tax Act, 1922 (11 of 1922 ) 3, or where the rules of the fund contain provisions corresponding to rules 4, 5, 6, 7, 8, and 9 of the Indian Income- tax (Provident Funds Relief) Rules.
(4)Where a 1 trust has been created by a company with respect to any provident fund referred to in sub- section (1), the company shall be bound to collect the contributions of the employees concerned and pay such contributions as well as its own contributions, if any, to the trustees 2 within fifteen days from the date of collection]; but in other respects, the obligations laid on the company by this section shall devolve on the trustees and shall be discharged by them instead of by the company."
29. Relevant portion of the notification dated 2nd March, 2015 issued by Ministry of Finance is reproduced hereunder:-
"F. No. 11/14/2013-PR.--In partial modification of this Ministry's Notification No. 5(88)/2006-PR dated 14th August, 2008, the pattern of investment to be followed by Non-Government Provident Funds, Superannuation Funds and Gratuity Funds shall be as follows, effective from 1st April, 2015:--
Category Investment Pattern Percentage amount to be invested
(i) Government Securities and Related Investments Government Securities, Other Securities {''Securities' as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956} the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government or any State Government.
The portfolio invested under this sub-category of securities shall not be in excess of 10% of the total portfolio of the fund.
Units of Mutual Funds set up as dedicated funds for investment in Govt. securities and regulated by the Securities and Exchange Board of India:
Provided that the portfolio invested in such mutual funds shall not be more than 5% of the total portfolio at any point of time and fresh 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 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 commercial banks, which satisfy the following conditions on the basis of published annual report(s) for the most recent years, as required to have been published by them under law:
having declared profit in the immediately preceding three financial years;
maintaining a minimum Capital to Risk Weighted Assets Ratio of 9%, or mandated by prevailing RBI norms, whichever is higher;
having net non-performing assets of not more than 4% of the net advances;
having a minimum net worth of not less than Rs. 200crores.
Units of Debt Mutual Funds as regulated by Securities and Exchange Board of India:
Provided that fresh investment in Debt Mutual Funds shall not be more than 5% of the fresh accretions invested in the year and the portfolio invested in them shall not exceed 5% of the total portfolio of the fund at any point in time.
The following infrastructure related debt instruments:
Listed (or proposed to be listed in case of fresh issue) debt securities issued by body corporates engaged mainly in the business of development or operation and maintenance of infrastructure, or development, construction or finance of low cost housing.
Further, this category shall also include securities issued by Indian Railways or any of the body corporates in which it has majority shareholding.
This category shall also include securities issued by any Authority of the Government which is not a body corporate and has been formed mainly with the purpose of promoting development of infrastructure.
It is further clarified that any structural obligation undertaken or letter of comfort issued by the Central Government, Indian Railways or any Authority of the Central Government, for any security issued by a body corporate engaged in the business of infrastructure, which notwithstanding the terms in the letter of comfort or the obligation undertaken, fails to enable its inclusion as security covered under category (i) (b) above, shall be treated as an eligible security under this sub-category.
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 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 further that investments under this category requiring a minimum AA rating, as specified above, shall be permissible in securities having investment grade rating below AA in case the risk of default for such securities is fully covered with Credit Default Swaps (CDSs) issued under Guidelines of the Reserve Bank of India and purchased along with the underlying securities. Purchase amount of such Swaps shall be considered to be investment made under thiscategory.
For sub-category (c), a single rating of AA or above by a domestic or international rating agency will be acceptable.
It is clarified that debt securities covered under category (i) (b) above are excluded from this category (ii).
Minimum 35% and up to 45%
(iii) Short-term Debt Instruments and Related Investments Money market instruments:
Provided that investment in commercial paper issued by body corporates shall be made only in such instruments which have minimum rating of A1+ by at least two credit rating agencies registered with the Securities and Exchange Board of India.
Provided further that if commercial paper has been rated by more than two rating agencies, the two lowest of the ratings shall be considered.
Provided further that investment in this sub-category in Certificates of Deposit of up to one year duration issued by scheduled commercial banks, will require the bank to satisfy all conditions mentioned in category (ii) (d) above.
Units of liquid mutual funds regulated by the Securities and Exchange Board of India.
Term Deposit Receipts of up to one year duration issued by such scheduled commercial banks which satisfy all conditions mentioned in category (ii) (d)above.
Upto 5%
(iv) Equities and Related Investments Shares of body corporates listed on Bombay Stock Exchange (BSE) or National Stock Exchange (NSE), which have:
Market capitalization of not less than Rs. 5000 crore as on the date of investment;and Derivatives with the shares as underlying, traded 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 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 India.
Asset Backed Securities regulated by the Securities and Exchange Board of India.
Units of Infrastructure Investment Trusts regulated by the Securities and Exchange Board of India.
Provided that investment under this category No. (v) shall only be in listed instruments or fresh issues that are proposed to be listed.
Provided further that investment under this category shall be made only in such securities which have minimum AA or equivalent rating in the applicable rating scale from at least two credit rating agencies registered by the Securities and Exchange Board of India under Securities and Exchange Board of India (Credit Rating Agency) Regulations, 1999. Provided further that in case of the sub-categories (b) and (d) the ratings shall relate to the rating of the sponsor entity floating the trust.
Provided further that if the securities/entities have been rated by more than two rating agencies, the two lowest of the ratings shall be considered.
Upto 5%
30. Heard Mr. Anurag Singh, learned counsel appearing for the C.B.I. Despite the link having been sent to the counsel for the accused-applicant, he has not made an endeavour to address the Court through video conference even in revised call. On the last date of hearing i.e. 30th September, the counsel for the accused-applicant sought time for filing rejoinder affidavit and, on his request, the hearing of case was fixed for today. The learned counsel for the accused-applicant has neither filed any rejoinder affidavit nor has cared to address the Court through video conferencing.
31. Mr. Anurag Singh, learned counsel appearing for C.B.I. has submitted that the accused-applicant was the kingpin of the mega scam who in criminal conspiracy with his father, P. K. Gupta and other accused illegally, unauthorizedly and for oblique purposes and motive to earn huge brokerage for personal gain, invested the fund amount with unsecured companies and caused loss of thousands of crores to the funds which have been created from the hard earned money of 42,000 employees of three electricity public sector companies of the State. The accused-applicant had created a web of shell companies for making investments of the fund amount and thus, earned huge illegal brokerage. Investigation of the case is yet to be completed and, therefore, he is not entitled to be enlarged on bail as he is able to influence the course of investigation and tamper with the evidence.
32. Initially, this case was registered at Police Station, Hazaratganj, Lucknow on 02.11.2019 vide case crime no. 540/2019. Thereafter, the investigation of this case was transferred to EOW on same day. EOW, Lucknow took the investigation of this case on 03.11.2019. There are two named accused in this FIR namely, Shri Praveen Kumar Gupta, the then Secretary of Trust, UPPCL and Shri Sudhansu Dwivedi, the then Director (Finance), UPPCL.
33. EOW, UP Police has arrested total 17 persons including Mr. Praveen Kumar Gupta, Mr. Sudhanshu Dwivedi. Thereafter, First charge-sheet was filed on 31.01.2020 against the three accused persons namely Mr. Praveen Kumar Gupta, the then Secretary of Trust, UPPCL, Mr.Sudhanshu Dwivedi, the then Director (Finance), UPPCL and Mr.Ayodhya Prasad Mishra, the then Managing Director, UPPCL. Second chargesheet was filed on 11.02.2020 against Mr. Abhinav Gupta son of accused, Mr. Praveen Kumar Gupta, the then Secretary of the Trust, U.P.P.C.L. and others. Third charge-sheet was filed on 02.03.2020 against Mr. Shyam Kishor Agarwal and others. Fourth charge-sheet has been filed on 05.03.2020 against Mr. Manoj Goyal and others.
34. On being referred by Government of Uttar Pradesh, vide notification dated 02.11.2019 and subsequent notification dated 20.02.2020 issued by Government of India, CBI/ACB, Lucknow has taken over the investigation of FIR No.540/2019 registered with Police Station- Hazratganj, Lucknow and registered case RC0062020A0005 dated 05.03.2020 under Sections 409, 420, 467, 468 and 471 IPC against Shri Praveen Kumar Gupta, the then Secretary (Trust) and Mr. Sudhanshu Dwivedi, the then Director (Finance) both of UPPCL.
35. The case RC0062020A0005 registered by CBI, ACB, Lucknow on 05.03.2020 is presently under investigation.
36. It is submitted that the investigation so far has revealed that Shri Praveen Kumar Gupta, the then Secretary, U.P.P.C.L. Trust in criminal conspiracy with Shri Sudhanshu Dwivedi, the then Director, Finance, U.P.P.C.L. and Shri A.P. Mishra, the then Managing Director, U.P.P.P.C.L. dishonestly and fraudulently by abusing their official position as a public servants violated the guidelines dated 02.03.2015 of Ministry of Finance, Government of India and initiated a note on 17.12.2016 for investment of funds of GPF Trust and CPF Trust in PNB Housing Finance Company Ltd., this note was approved by Shri A.P. Mishra, the then Managing Director without any authority to act as such in furtherance of criminal conspiracy. Thereafter, Shri Praveen Kumar Gupta, Secretary, Trust, U.P.P.C.L. dishonestly and fraudulently invested Rs50/- Crores each of CPF and GPF Trust (total Rs 100/- Crores) on 19.12.2016 in the fixed deposits of PNB Housing Finance Company Ltd. (A private and highly unsecured company) first time since the constitution of GPF and CPF Trust.
37. The investigation has revealed that accused public servants dishonestly and fraudulently by abusing their official positions as public servants and in criminal conspiracy with other accused persons invested funds of GPF and CPF Trust to the tune of Rs.1519.6 Crores in PNB Housing Finance Company Ltd., Rs.514 Crores in LIC Housing Finance and Rs.4122.7 Crores in M/s DHFL. Thus total funds to the tune of Rs.6156.3 Crores of thousands of employees of UP Power Corporation Ltd. were invested in the aforesaid private housing finance companies against the rules and guidelines and out of the aforesaid funds, funds to the tune of Rs.2267.9/- Crores have been misappropriated by accused persons.
38. During investigation conducted by EOW, UP Police, the role of accused applicant Abhinav Gupta S/o Shri Praveen Kumar Gupta, Secretary, Trust (GPF and CPF both), UPPCL, Lucknow has surfaced and thereafter, he was arrested by EOW, UP Police on 14.11.2019 and after completion of investigation charge sheet was filled by EOW, UP Police, against the accused applicant on 12.02.2020 U/s 409, 420, 467, 468, 471, 120 B IPC and 7A & 8 of PC Act. However, further investigation of this case by CBI is still in progress and money trail of misappropriated funds as well as the brokerage received is being ascertained.
39. During investigation, it has been found that hard earned money amounting to Rs 2267.9 Crores ( Approx.) of 42000 employees of U.P.P.C.L., who had invested it with the hope that they will get good return on it at the time when they will have its need, but their hope has been ruined as the said amount was swindled by accused persons in furtherance of criminal conspiracy with each other including accused applicant Abhinav Gupta.
40. During further investigation conducted by CBI, it has been revealed that accused applicant Abhinav Gupta was using mobile phone no. 9999708124 and during relevant period he was in regular telephonic touch with the co-accused, Ashish Chaudhary, his father Praveen Kumar Gupta, co-accused Amit Prakash, Regional Manager of DHFL, Lalit Goel, Chartered Accountant and Vikash Saxena, Regional Manager, Fixed Deposit, PNB Housing Finance Ltd., Lucknow.
41. It has also been revealed that accused Abhinav Gupta had sent mail on 28.12.2018 to Shri Vikas Saxena, Regional Manager, PNB Housing Finance Ltd. (PNB HFL), Lucknow and sent KYC documents related to M/s Subhalika Trade Link Pvt. for registration with PNB Housing Finance Ltd. as broker. He has sent email and forwarded the KYC documents of M/s DS Traders on 02.03.2019.
42. Investigation has further revealed that after registration of aforesaid two firms as broker with PNB HFL, Lucknow, during January-2019 to April-2019 investments to the tune of Rs 357 Crores were also made through brokers M/s Subhalika Trade Link Pvt. Ltd. and M/s DS Traders in fixed deposits of PNB Housing Finance Ltd. against the rules and guidelines dated 02.03.2015 issued by Government of India.
43. Investigation has further revealed that brokerage to the tune of Rs1,12,10,000/- and Rs 29,20,000/-were paid to M/s D. S. Traders and M/s Subhalika Trade Link Pvt. Ltd. respectively against the investment in fixed deposits of PNB HFL as mentioned above.
Investigation has further revealed that accused Abhinav Gupta entered in criminal conspiracy with his father Praveen Kumar Gupta, the then Secretary, U.P.P.C.L., Trust, Lucknow with an object to misappropriate GPF/ CPF funds of 42000 employees of UP Power Corporation Ltd. and also to obtain the brokerage illegally against the said investments.
44. The accused Abhinav Gupta in criminal conspiracy with co-accused Amit Prakash Regional Sales Manager, DHFL Lucknow dishonestly and fraudulently got registered 12 firms as brokers with DHFL, Lucknow for investment of funds of U.P.P.C.L., GPF and CPF Trust through said brokers in the fixed deposits of DHFL, and PNB HFL so that huge brokerage could be obtained illegally.
45. I have considered the submissions and the provisions of the relevant rules and the Acts carefully.
46. 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 co-accused 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.
47. The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations.
48. The Supreme Court in the case of Y.S. Jagan Mohan Reddy vs CBI: (2013) 7 SCC 439 in paras 34 and 35 in respect of granting bail in economic offences having deep rooted conspiracy and large 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."
49. The Supreme Court in the case of Nimmagadda Prasad vs CBI: (2013) 7 SCC 466 has observed that the alarming rise in white collar crimes has affected the fibre of country's economic structure. Economic offences have serious repercussions on the development of the country as a whole. Economic offences constitute a class apart and a different approach has to be adopted in the matter of bail. Para 23 to 25 of the aforesaid judgment are extracted hereinbelow:-
"23. Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar 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 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 purpose of granting bail, the legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the court dealing with the grant of bail can only satisfy itself as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.
25. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep-rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country."
50. 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 socio-economic 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 Court has not given any reasoning while granting bail. In a mechanical way, the High Court granted bail more on the fact that the accused is already in custody for a long time. When the seriousness of the offence is such the mere fact that he was in jail for however long time should not be the concern of the courts. We are not able to appreciate such a casual approach while granting bail in a case which has the effect of undermining the trust of people in the integrity of the education system in the State of Bihar.
9. We are conscious of the fact that the accused is charged with economic offences of huge magnitude and is alleged to be the kingpin/ringleader. Further, it is alleged that the respondent-accused 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."
51. 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 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 commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.
52. The Supreme Court in its judgment in Serious Fraud Investigation Office Vs. Nitin Johri and another, (2019) 9 SCC 165, while considering the factors to be taken into account while considering the bail involving serious economic offences in para 24-27 has held as under:-
"24. At this juncture, it must be noted 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 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 : (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 Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] , which discusses the effect of the twin mandatory conditions pertaining to the grant of bail for offences under the Maharashtra Control of Organised Crime Act, 1999 as laid down in Section 21(4) thereof, similar to the conditions embodied in Section 212(6)(ii) of the Companies Act. However, the High Court went on to grant bail to Respondent 1 by observing that bail was justified on the "broad probabilities" of the case.
27. In our considered opinion, this vague observation demonstrates non-application of mind on the part of the Court even under Section 439 CrPC, even if we keep aside the question of satisfaction of the mandatory requirements under Section 212(6)(ii) of the Companies Act."
53. The present case involves a mega scam of huge magnitude involving money of 42000 employees of three Electricity Corporations who had invested their hard earned money with the hope that they would get good return on it at the time they would need money. Trust has been breached in criminal conspiracy by the accused which has resulted huge loss to the two Trusts resultantly to the employees. The accused is an influential person. The money trail is yet to be completely discovered and, therefore, at this stage, the accused-applicant cannot be released on bail.
54. This Court has already rejected the bail applications of the accused, Sudhanshu Dwivedi, Vikas Chawla and Ayodhya Prasad Singh vide orders dated 07.04.2020, 07.04.2020 and 10.04.2020. Second bail application filed by accused-Vikas Chawla has also been rejected by this Court vide order dated 21.09.2020 in Bail No.3817 of 2020.
55. In view of the aforesaid, I do not find any ground to grant indulgence to the accused-applicant. The bail application of the accused-applicant is thus, rejected.
Order Date :- 08.10.2020 prateek