The Lucknow Bench of the Allahabad High Court has rejected the second bail plea of the then Finance Director Sudhanshu Dwivedi in the PF scam case in Power Corporation during the Samajwadi Party government.
A single-judge bench of Justice Dinesh Kumar Singh passed this order while hearing a Bail Application filed by Sudhanshu Dwivedi.
Dwivedi’s first application for bail had been rejected on April 7, 2020. The applicant has sought bail in FIR Police Station CBI-ACB, Lucknow under Sections 409, 420, 467, 468, 471 and 120B Indian Penal Code, 1860 read with Section 13(2) of the Prevention of Corruption Act, 1988, which was initially lodged at Police Station Hazratganj, Lucknow.
The investigation of the case was transferred to the CBI and consequently, at Police Station CBI-ACB, Lucknow under Sections 409, 420, 467, 468, 471 and 120-B IPC read with Section 13(2) of the PC Act was registered on March 5, 2020.
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 January 14, 2000 into 3 Companies i.e (i) Uttar Pradesh Power Corporation Limited (UPPCL), (ii) Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, and (iii) Uttar Pradesh Hydro Power Corporation Limited.
On January 14 , 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 April 19, 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.
A Trust-deed was executed on April 24, 2000 for creation of the Trust. As per trust deed, the aforesaid three funds namely, General Provident Fund, Gratuity Fund and Pension Fund created for the benefit of employees of three power corporations shall be called “Uttar Pradesh State Power Sector Employees General Provident Fund”,
“Uttar Pradesh State Power Sector Employees Gratuity Fund” and “Uttar Pradesh State Power Sector Employees Pension Fund”.
For the management of provident fund of the employees joining the UPPCL on January 14, 2000 or later, Uttar Pradesh Power Corporation Contributory Provident Fund Rules, 2004 were enacted and made applicable with effect from April 1, 2004. Uttar Pradesh Power Corporation Contributory Provident Trust was constituted on June 25, 2006 under the Provident Fund Act, 1952.
Appropriation and the management of Provident Funds of the employees of the Uttar Pradesh State Power Sector Employees Trust and the Uttar Pradesh Corporation CPF Trust was the responsibility of Secretary (Trust) and Director (Finance) UPPCL. The management, appropriation and other related actions with respect to provident funds account of the employees were to be performed by the Secretary and Director of both the Trusts in accordance with the directions issued by the Central Government from time to time.
In the month of December 2016 on the proposal of the then Secretary of the Trust, Praveen Kumar Gupta after obtaining approvals from the then Director (Finance) Sudhanshu Dwivedi and the then Managing Director, UPPCL, A.P Mishra, co-accused, they started investing the GPF and CPF funds in the PNB Housing term deposits. In the same series, the GPF and CPF funds were invested as term deposits by Sudhanshu Dwivedi and Praveen Kumar Gupta from March 2017 in a private institution named Dewan Housing Finance Ltd (DHFL) without taking the recommendation/cognizance of MD/Chairman and without any authority of law in an illegal and mala fide manner for personal gains.
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It is alleged that appropriation of funds was not done in accordance with the notification dated March 2, 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%.
It is alleged that forged and fabricated minutes of the meeting of the Board of Trustees of the Contributory Provident Fund allegedly held on March 24, 2017 were prepared. In the 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 the prevailing practice, further investment and securities would be decided by the Secretary (Trust) on a case to case basis with the consent/approval of the Director (Finance), UPPCL trustee.”
It has been alleged that as per record available in the office of trust from March 2017 to December 2018, the then Secretary (Trust) Praveen Kumar Gupta who was in charge of both CPF and GPF Trust after obtaining approval from the then Director (Finance), Sudhanshu Dwivedi and transgressing the clear directives of the Government of India as contained in its notification dated March 2, 2015 according to which clear directions were issued that the amounts 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 well that it did not fall in the category of unscheduled commercial banks, and it was an unsecured private institution.
It is also alleged that according to the records available, GPF contributions amounting to Rs 2631.20 crore were invested in DHFL out of which only Rs 1185.50 crore have been received by the trust office and an amount of Rs 1445.70 crore plus interest is yet to be received. Similarly, an amount of Rs 1491.5 crore of the Contributory Provident Fund was invested in the DHFL, out of which Rs 669.3 crore have been received by the office of the trust and Rs 822.2 crore plus interest is yet to be received. Thus, the total amount of Rs 2267.90 crore (Principal Amount) and interest is yet to be received from DHFL.
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It is alleged that the then Director (Finance) and the Secretary, Trust by not following the directives issued by the Government of India dated 2nd March, 2015 and investing more than 50% of the amount of employees’ GPF and CPF in DHFL, have committed the offence of Criminal Breach of Trust, causing huge loss to the two employees trusts.
Kamini Jaiswal, the counsel, assisted by Saurabh Shankar Srivastava, Advocate, representing the accused-applicant, submitted that the accused-applicant was posted as Director (Finance) of the UPPCL on June 30, 2016 and, in that capacity, he became one of the trustees of the Trust; role of the accused-applicant was limited to approve the proposal tabled by the Secretary of the Trust and, thereafter making recommendations to the Board for making investment.
It is said that it is the Secretary P.K. Gupta, who tabled the proposal for investment in DHFL, which was a ‘AAA’ rated Company, along with the rates offered by it and, the accused-applicant forwarded the said proposal with the formal approval of the Board of Trustees for investment.
However, the Board of Trustees passed a resolution on 22.03 2017 /24.03.2017 and took a collective decision to invest in DHFL. It is important to note that the minutes of the Board’s meeting dated 22.03.2017/24.03.2017 are said to be forged.
Anurag Kumar Singh, counsel, representing the CBI, submitted that the accused applicant, who was Director (Finance) and the Trustee, was responsible to operate the account of two trusts along with the Secretary of the Trusts. It was the accused-applicant, who recommended investment in DHFL. The investments were made on March 17, 2017, without there being any authorization of the Board of Trustees, but the same were justified by forging the minutes of meeting of the Board allegedly held on March 17, 2017. The minutes of the meeting dated March 24, 2017 were prepared on which signatures of Chairman, Sanjay Agrawal were forged.
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It is further submitted that acts of omission and commission of the accused-applicant, along with co-accused, have caused huge loss to the two Trusts created for the welfare of poor 42000 employees of the three electricity corporations, out of their hard-earned money.
It is further submitted that the Court has rejected the first bail application of the accused-applicant by passing a detailed judgment and order and, therefore, there is no fresh ground for enlarging the accused-applicant on bail.
This is the second bail application on behalf of the accused-applicant. The Court has to consider whether there is fresh ground for enlarging the accused-applicant on bail or not, which is different from the one which was taken by him in his first bail application.
“Considering the magnitude of the financial loss to two employees’ funds caused by the acts of omissions and commissions of the accused-applicant and other co-accused and also the fact that it was the accused-applicant, who was the architect in making investment in DHFL in order to obtain huge illegal commission on the investment made, at this stage, this Court does not find any fresh ground or changed circumstance for enlarging the accused-applicant on bail. The case of the accused-applicant is different from the case of A.P. Mishra, as mentioned above. The accused-applicant cannot claim parity with A.P. Mishra and Abhinav Gupta. No investment was made by the signatures of A.P. Mishra in DHFL. Abhinav Gupta has been enlarged on bail by the Supreme Court, who is a private person, on the ground that he was not a public servant. In view thereof, the Court does not find any fresh ground to set the accused-applicant at liberty of bail,”
-the Court observed while rejecting the bail application.