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Bombay HC orders CBI, ED, I-T probe into Sinhgad trust that runs 44 institutions
The order to have the CBI, ED and Income Tax department look into the trust’s operations was passed by a special bench of justices G S Kulkarni and Advait M Sethna
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The Bombay High Court has ordered a multi-agency investigation into the affairs of 44 educational institutions operated by the Sinhgad Technical Education Society (STES) and its trustees over suspicions of financial irregularities and diversion of funds.
The order to have the Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Income Tax department look into the trust’s operations was passed by a special bench of justices G S Kulkarni and Advait M Sethna on Tuesday in connection with about 220 petitions filed by teaching and non-teaching employees of the institutions over the years complaining about prolonged non-payment of salaries and retirement benefits.
The court noted that the outstanding dues were estimated to exceed ₹400 crore and that around 13 employees were reported to have died by suicide over the years due the financial distress. “The situation is so grave that it is difficult for the Court to remain a mute spectator,” the special bench said.
HT has reached out to the trust’s managing trustee, Maruti Navale, for his reaction to the court ruling. This story will be updated when he comments.
The high court has also frozen the bank accounts and investments of the trust and its trustees, and prohibited them from doing anything about their movable and immovable properties and shareholdings that would create third party rights.
The court order followed the failure of trust to honour its undertaking to deposit ₹60.65 crore by November 7. The special bench was constituted by the high court after the petitioners approched the court, complaining that not a single rupee was paid by the trust.
The court also noted that the regular bench, which had been hearing the case, had granted protection to the trust and its trustees on the basis of this undertaking. The matter will be placed before the regular bench on November 19 for further consideration.
The court noted that false affidavits filed by managing trustee Maruti Navale could prima facie amount to perjury and contempt of court, and issued show-cause notices to STES and eight trustees, asking why contempt proceedings should not be initiated against them.
Directing a probe into the society’s affairs, the court said: “The appropriate authorities of the Central Government namely the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED) acting under the Prevention of Money Laundering Act, 2002, the Income Tax Authorities shall undertake an investigation into the affairs of these 44 institutions and its trustees.”
The court underlined that the institutions had been admitting students and collecting fees for years despite not paying salaries to employees, raising questions over the use of the funds.
“We thus have a strong prima facie case of there being materials which would indicate that amounts are being siphoned away, to the deprivation of the employees. The outstanding amounts payable to the employees are stated to be more than Rupees 400 crores,” the court said.
“We are conscious that when we intend to direct such inquiry including by the CBI, the same would be required to be directed as a matter of rarity. We are certainly not passing such order as a routine, but considering as exceptional situation which has arisen in the present proceedings. As in our opinion, such order is necessary in the facts of the case for doing complete justice, in enforcing the fundamental rights of the petitioners.”
The court also vacated its stay, granted on November 6, on the education department’s move to decognise 13 schools and appoint an administrator for the technical institutes
The court ordered the state government to either take over the institutions or make arrangements to shift their students to other institutions. It directed the administrator appointed for the technical institutions to take charge and asked the department to initiate action against the remaining institutions under the relevant Maharashtra laws. The Directorates of Higher Education and Technical Education were also directed to act against other educational institutions defaulting on salary payments.
The court directed the Employees’ Provident Fund authorities to investigate the society’s compliance with statutory obligations and take appropriate action. Maharashtra’s charity commissioner was also told to inquire into the affairs of the trust and its trustees under the Maharashtra Public Trusts Act, 1950. The Chief Commissioner of Income Tax, Pune, was directed to examine the income-tax returns filed by the institutions and trustees.
The court also directed the Pune police to act on the cases pending before it in connection with the trust and its trustees and file a progress report on the next date of hearing.
The trustees were further directed to hand over all records of the society and cooperate with the investigation. “We also direct the trustees to hand over without any hindrance the entire record of the STES and co-operate fully with the Investigating Officer as ordered by us, and any non cooperation shall be dealt strictly in accordance with law,” the court stated.
