2020 (4) TMI 916 - HC - Indian Laws

Seeking grant of bail - criminal conspiracy and corruption - Misappropriation of Provident Fund (PF) investments - HELD THAT - 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. 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. The present case involves a scam of huge magnitude involving money of 42000 employees of three Electricity Corporations who had invested it with a 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. The trial court in a well considered order has rejected the bail application of the accused applicant - the bail application of the accused-applicant is rejected.

Summary

Issues Involved:
1. Bail application under Section 439 Cr.P.C.
2. Allegations of criminal conspiracy and corruption.
3. Misappropriation of Provident Fund (PF) investments.
4. Violation of statutory provisions and government notifications.
5. Economic offences and their impact.

Issue-wise Detailed Analysis:

1. Bail Application under Section 439 Cr.P.C.:
The present applications under Section 439 Cr.P.C. have been filed seeking bail in FIR No. 540 of 2019, initially registered under Sections 409, 420, 467, 468, 471, 120B IPC, and subsequently under Section 13(2) of the Prevention of Corruption Act. The accused-applicant was the Managing Director of U.P.P.C.L. from 31.12.2012 to 23.03.2017. The trial court rejected the bail application, and the High Court upheld this decision, emphasizing the severity and magnitude of the economic offence.

2. Allegations of Criminal Conspiracy and Corruption:
The FIR alleges that the accused, in criminal conspiracy with other officials, invested Provident Fund amounts in DHFL and PNB Housing Finance Ltd. without legal authority, aiming for personal gains through illicit brokerage. The accused allegedly approved these investments, violating various statutory provisions and government notifications, causing significant financial loss.

3. Misappropriation of Provident Fund (PF) Investments:
The investments were made without the authorization of the Board of Trustees. The accused and co-accused invested GPF and CPF funds in DHFL, a private institution, contrary to statutory guidelines. The misappropriation led to a loss of Rs. 2267.90 crores (Principal Amount) and interest, with only partial recovery. The accused allegedly received a brokerage amount of Rs. 30 crores, divided among them.

4. Violation of Statutory Provisions and Government Notifications:
The investments violated several statutory provisions, including the Indian Trust Act, 1882, Companies Act, 1956, Provident Funds and Miscellaneous Provisions Act, 1952, and the government notification dated 2nd March 2015. The notification specified investment patterns for Non-Government Provident Funds, which were not followed. The accused's actions were deemed unauthorized and illegal, aimed at earning illicit brokerage.

5. Economic Offences and Their Impact:
The judgment emphasized that economic offences involving deep-rooted conspiracies and significant public fund losses need to be viewed seriously. The court referred to various Supreme Court judgments, highlighting the need for a stringent approach towards bail in economic offences. The accused's actions breached the trust of 42,000 employees, causing a massive financial loss. The court concluded that releasing the accused on bail could impede the ongoing investigation into the money trail and other aspects of the scam.

Conclusion:
The High Court rejected the bail application, citing the severity of the economic offence, the breach of trust, and the substantial financial loss caused by the accused's actions. The court emphasized the need for a different approach in granting bail for economic offences, considering the larger public interest and the potential impact on the financial health of the country.