What was the real reason to withdraw the case?
The true reason for withdrawing a case, which seemed pretty strong on the face of it, becomes apparent in the investigation report.
Evidently, Titagurh had got its facts wrong in its 2001 petition.
In 1968, Samnuggur and Victoria Mills had been amalgamated with the holding company. The share certificates of the merging companies had been extinguished. But the petition treated them as separate entities.
This was tantamount to misleading the court, and on no grounds would the court have condoned the mistake. This also means that the shares sold by the provident fund officials were dud shares. 'This needs to be investigated by the Department of Company Affairs,' says the Kaul report.
By this time, the EPFO's central office had realised the grave problems with these sales and had to act.
On July 5, 2004, the EPFO moved to undo the sale. It issued show cause notices to the new owners of the jute mills as to why the sale orders issued on August 21, 2001 shouldn't be reviewed.
Instantly, the new owners moved court arguing that the show cause notice was illegal and void. In their petition, the owners also say that when the shares were sold, Titagurh and its three subsidiaries also owed Rs 25 crore (Rs 250 million) dues outstanding to the Employees' State Insurance Corporation, Rs 180 crore (Rs 1.80 billion) to the sales tax department and Rs 50 crore (Rs 500 million) to workers and creditors.
'The interest and damages on these dues will be more than Rs 200 crore (Rs 2 billion). The immovable properties are also mortgaged to the secured creditors.'
The petitions further stated that valuation reports conducted by the owners show that the net worth and share values of these mills are negative.
Isn't it odd that there would be such a clamour for assets whose worth has been wiped out?
When the complaints from the British high commission reached the EPFO head office through the PMO, a departmental inquiry was ordered and Rajat Goswami, the regional provident fund commissioner at the time, and the recovery officer, K P Senchowdhury, were suspended.
Goswami is now the head of the zonal training institute. Senchowdhury was recently raided by the CBI's Ranchi branch for an alleged fraud in Jamshedpur.
The Central Vigilance Commissioner had asked for a detailed report on the jute mills sale. During hearings, all officers said they were acting at the behest of a higher provident fund official. The real kingpin of the operation, say EPFO sources, was S K Khanna, the current additional CPFC (compliance and eastern zone) and the project director of the EPFO's modernisation project.
This is corroborated by a letter sent by the previous CPFC to former labour secretary P D Shenoy, in June 2004.
At the time of the mill sale, Khanna was head of the zonal training institute. But he was also the programme director (east zone) for Compliance 2001, an enforcement drive launched by the EPFO to bring defaulting employers to book.
Ostensibly, the West Bengal provident fund office's move against the mills with long-standing dues was a part of this drive.
On the basis of the reports, the CVC recommended initiation of major penalty proceedings against Khanna and the others. The file, which was cleared by the labour ministry, led to a chargesheet being framed and served on Khanna. Whether that has been processed further is not known.
Meanwhile, the CBI's Anti Corruption Branch in Kolkata has registered a regular case under Section 420 of the Indian Penal Code in 2003. But investigating such white-collar crime has been tough for the Bureau.
It was only in February 2005 that the CBI asked the regional provident fund commissioner to produce information and documents on the sale.
There is a good chance of a stalemate on the issue, especially since Khanna is not only in charge of compliance issues, but also the eastern zone.
A few weeks ago, Khanna paid a visit to the Kolkata provident fund office and called for all legal files, including the files on these jute mills' sale.
Insiders feel his continued presence could hamper both the investigations as well as the EPFO's reforms project.
The Kanpur-based president of the All India Democratic Women's Association, Subhasini Ali, is one of the livid outsiders. She has even written to the PMO about this anomaly.
Meanwhile, 20,000 workers in West Bengal continue to wait, hoping to see their old age money in its rightful place.