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DHFL scam: ‘Investment guidelines don’t apply to UPPCL Trust’

By Brajendra K Parashar, Lucknow
PUBLISHED ON NOV 25, 2019 07:55 PM IST

Although the alleged breach of the government of India’s investment guidelines has been made the primary ground for action against the accused in the Dewan Housing Finance Ltd (DHFL) provident fund scam, the same guidelines are not applicable to the UP Power Corporation Ltd (UPPCL) whose trust parked over Rs 2,600 crore in the Mumbai-based private housing company.

This is because the guidelines that the Economic Offences Wing (EOW) has referred to in its ongoing investigation in the case apply to the establishments that are exempted by the Employee Provident Fund Organisation (EPFO) and the UPPCL, as already reported by HT earlier, was never permitted by EPFO to set up its own trust to collect and manage PF instead of sending the same to EPFO.

“The investment guidelines that the Central government issues from time to time are meant for establishments that are exempted by the EPFO but the UPPCL is not exempted and its Trust that is said to have invested employees’ PF in the DHFL has no legal sanctity for us,” Hemant Jain, financial advisor in the Central provident fund commissioner office, told HT over phone from Delhi.

“We cannot, therefore, comment whether the investment made by the UPPCL Trust in the DHFL was permissible or not under the guidelines that do not apply to it,” he added.

EPFO, it may be mentioned, has been issuing notice after notice to UPPCL asking it how it set up the Trust to collect employees’ contributory provident fund and manage and invest the same without ever seeking the mandatory exemption from it. EPFO is even fighting a legal battle against UPPCL in this regard.

EPFO gives exemption to an establishment—government or private, when it is satisfied that PF benefits under scheme proposed by it are in no way less than those provided by the EPFO. EPFO carries out annual rigorous audit of PF Trusts of all such exempted establishments.

The Ministry of Labour and Employment issued a gazette notification on Pattern of Investment for EPF Exempted Establishments on May 29, 2015 and UPPCL Trust authorities are accused of investing PF in DHFL in violation of the same guidelines and EOW registered a case against former UPPCL managing director, former director, finance and then Trust secretary sending all of them to jail.

“The question now arises how May 2015’s investment pattern can be made a ground for action when the investment pattern did not apply to UPPCL Trust as it did not enjoy exemption from EPFO,” EPFO sources here said.

“Now, it is for them to find out which other guidelines are applicable to in this case, but to us the UPPCL Trust operating since 2006 is illegal and investment guidelines have nothing to do with it. We can comment on the legality or illegality of the DHFL investment only after UPPCL surrenders its PF to us,” they added.

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