2020 (4) TMI 670 - HC - Indian Laws

Grant of Bail - investment made for personal gain - malafide intent - huge scam/loss of employees funds - 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 - notification dated 2nd March, 2015 issued by Ministry of Finance. HELD THAT - The accused-applicant was Director (Finance) and the trustee who was to operate the account of the trust with secretary of the Trusts. He was the person who recommended for investment in the DHFL.The investments were made on 16th March, 2017 without there being any authorisation 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 ₹ 30 crores was given by DHFL for making investment and this brokerage amount was divided among three accused - The economic crime of such scale and magnitute 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 the 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. Considering the allegation and the evidence available on record and the fact that a deep rooted conspiracy involved in the present case, it is not found appropriate to release the accused applicant on bail at this stage and thus, his bail application is also rejected - application dismissed.

Summary

Issues Involved:
1. Bail application under Section 439 Cr.P.C.
2. Criminal breach of trust and conspiracy.
3. Investment of provident funds in violation of statutory provisions.
4. Receipt of brokerage amounts from DHFL.

Issue-Wise Detailed Analysis:

1. Bail Application under Section 439 Cr.P.C.:
The accused-applicants sought bail under Section 439 Cr.P.C. for their involvement in FIR No. 540 of 2019, initially registered under various sections of IPC and later included Section 13(2) of the Prevention of Corruption Act. The court considered the nature of accusations, the gravity of the offense, and the evidence available. It emphasized that economic offenses involving deep-rooted conspiracies and significant public funds must be viewed seriously. The court cited precedents where stringent parameters are applied for bail in economic offenses, highlighting the need to maintain public trust and the financial health of the country.

2. Criminal Breach of Trust and Conspiracy:
The accused, in their capacity as trustees and officials of UPPCL, were responsible for managing and investing the provident funds of employees. Allegations included investing funds in DHFL, a private entity, without proper authorization and in violation of government directives, resulting in a significant financial loss. The court noted that the accused acted with malafide intentions for personal gain, breaching the trust of 42,000 employees. The court referenced the Supreme Court's stance on economic offenses, emphasizing the need for a different approach in bail matters due to the severe impact on public funds and trust.

3. Investment of Provident Funds in Violation of Statutory Provisions:
The court examined the statutory framework governing the investment of provident funds, including the Employees Provident Fund and Miscellaneous Provisions Act, 1952, the Indian Trust Act, 1882, and relevant rules and notifications. The accused allegedly violated these provisions by investing more than 50% of the provident funds in DHFL, a non-banking financial company, without proper authorization from the Board of Trustees. The court found that the investments were made in blatant disregard of statutory guidelines, resulting in a loss of ?2267.90 crores (principal amount) and interest.

4. Receipt of Brokerage Amounts from DHFL:
The investigation revealed that the accused received brokerage amounts from DHFL for making the investments. The court noted that the brokerage was distributed among the accused, indicating a criminal conspiracy. The court referenced statements and documentary evidence showing the transfer of brokerage amounts to various companies, including those associated with the accused. The court emphasized the need to uncover the complete money trail and the involvement of the accused in the conspiracy.

Conclusion:
The court rejected the bail applications of the accused, Sudhanshu Dwivedi and Vikas Chawla, citing the gravity of the offense, the involvement of significant public funds, and the deep-rooted conspiracy. The court underscored the need for stringent measures in cases involving economic offenses to maintain public trust and ensure the financial health of the country. The trial court's decision to deny bail was upheld, emphasizing that the accused could not be released on bail at this stage due to the serious nature of the allegations and the ongoing investigation.