FINAL ORDER - IN THE MATTER OF ALANKIT ASSIGNMENTS LTD. & ORS.

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

FINAL ORDER

BEFORE WHOLE TIME MEMBER (ECONOMICS)

UNDER SECTION 30 OF THE PFRDA ACT, 2013 READ WITH REGULATION 11 OF PFRDA (PROCEDURE FOR INQUIRY BY ADJUDICATING OFFICER) REGULATIONS, 2015

IN THE MATTER OF ALANKIT ASSIGNMENTS LTD. & ORS.
(Case No. PFRDA/17/06/16/0010/2017-SUP-AGGR)

In the matter of:

1. Alankit Assignments Ltd.
   Alankit House, 4E/2,
   Jhandewalan Extension,
   New Delhi – 110055
   ...Noticee No. 1

2. Mr. Alok Agarwal,
   CEO & Director,
   Alankit Assignments Ltd.,
   Alankit House, 4E/2,
   Jhandewalan Extension,
   New Delhi – 110055
   ...Noticee No. 2

3. Mr. Mukesh Chandra Agarwal,
   Wholetime Director,
   Alankit Assignments Ltd.,
   Alankit House, 4E/2,
   Jhandewalan Extension,
   New Delhi – 110055
   ...Noticee No. 3

4. Mr. Yashjeet Basrar,
   Wholetime Director,
   Alankit Assignments Ltd.,
   Alankit House, 4E/2,
   Jhandewalan Extension,
   New Delhi – 110055
   ...Noticee No. 4

5. Mr. Harish Chandra Agarwal,
   Executive Director / Compliance Officer,
   Alankit Assignments Ltd.,
   Alankit House, 4E/2,
   Jhandewalan Extension,
   New Delhi – 110055
   ...Noticee No. 5

1. BACKGROUND

1.1 Noticee No. 1 was granted registration by the then interim Authority prior to the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, as a Point of Presence (PoP) on 10.03.2010, for a period of five years and as an Aggregator on 24.11.2010, initially for a period of three years which was further extended on 04.02.2014 and 20.11.2014 respectively. Noticees nos. 2,3,4 &5 are the Directors of the Noticee No. 1 and were responsible for the conduct of business of Noticee No. 1, in relation to activities under NPS and NPS lite.

1.2 Since the aforesaid registrations predated the notification of the PFRDA Act, 2013, Noticee No. 1 was required to seek renewal of its registration in accordance with the regulations framed under Section 52 thereof, namely the Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2015 and the PFRDA (Aggregator) Regulations, 2015. Noticee No. 1 applied for renewal of certificate of registration for PoP and Aggregator on 20.05.2015 and 09.07.2015, respectively.

1.3 However, during pendency of the said applications, the Authority received complaints vide email around the month of October to December 2015 from few individuals alleging that NPS Lite/ Swavalamban Scheme subscribers were being cheated by one Mr. B. Vijay Kumar Reddy who was allegedly associated with the Noticee No. 1.

1.4 Pursuant to receipt of these complaints, an onsite verification of Noticee No. 1 was conducted by officials of the Authority on 28.10.2015. Based on such verification, interalia the following discrepancies were prima facie observed, vide the report dated 13.09.2017 (i) the Noticee No. 1 had entered into agreements with third parties/individuals to act as PoP-SPs (Point of Presence- Service Providers) which comprised individuals, who were not permitted within the terms of PoP guidelines and SLA(s) (Service Level Agreement) (ii) as per information available with CRA, the Noticee No. 1 had registered about 75 POP-SPs to work for it, whereas the Noticee No. 1 only provided a list of 18 such entities (iii) As against 5 NLCCs (NPS Lite Collection Centres) shown to be registered in the CRA system by Noticee No. 1, to undertake activities pertaining to aggregators, Noticee No. 1 could provide details of only 2 entities (iv) an amount of Rs. 1-1.5 lakhs of unreconciled amounts belonging to subscribers was found in the system which initially was about Rs. 8 lakhs (v) the subscribers were allowed to deposit contributions directly into the Noticee No. 1's collection account, which was contrary to the regulations, resulting in difficulty in matching and booking and reconciliation of amounts and before the company (Noticee No. 1) had put any efficient mechanism in place to ensure reconciliation (vi) part of the activities to be performed by the Noticee No. 1 were being done by another company by the name Alankit Limited, without any authorization from the Authority or without such entity having obtained any seperate registration from the Authority (vii) the Noticee No. 1 had linkages with Mr. B. Vijay Kumar Reddy/Straddle infotech, who is alleged to have perpetuated many irregularities and defrauded subscribers. Based on such observations a notice dated 02.12.2015, was issued by the Authority to the Noticee No. 1, to stop forthwith, all discrepancies as above and confirm compliance to PFRDA and NPS Trust. Noticees vide their letter dated 01.02.2016, had inter alia submitted that they have taken corrective steps to ensure compliance i.e., have closed all entities operating as PoP-SPs but are only continuing with their company owned branches all across the country and 5 NLCCs in 2 regional offices at Hyderabad and Vishakhapatnam. Further, the Noticee No. 1 have filed police complaint and issued pubic notice against Straddle Infotech and B. Vijay Kumar Reddy.

1.5 Further, as per the fact-finding report dated 11.01.2016 of National Pension System Trust (NPST) it was found that the Noticee No. 1 had been receiving monies in its NPS-Lite collection account from one firm namely 'NPS services' allegedly run by Mr. B. Vijay Kumar Reddy, the same individual against whom the Authority received complaints of fraudulent dealing in activities under NPS. During January- April 2015, the said NPS services had deposited 26 times amount in NPS-Lite collection account amounting to Rs. 61,15,000/-. A scanned copy of the 'certificate' allegedly issued to NPS Services by Noticee No. 1 was also found by the NPST during its fact-finding exercise. It was further alleged in the said complaint that Mr. B. Vijay Kumar Reddy operated 'NPS services' by collecting security deposits ranging from ₹25,000 to ₹2 lakh from various district in-charges and business development officers. It was further reported by another complainant that ₹1,250/- was collected whereas only ₹1000/- was meant for PRAN deposit and the remaining amount was distributed across different levels. Noticees were also found to have tied up with around 1150 partners registered as POP-SPs, in violation of Clause 8.1(d) of the agreement of PoP. Further, Noticee No. 1 had opened 6 collection accounts with different banks, with debit and credit entries to third parties/ individuals.

1.6 The Authority issued a notice on 16.03.2016, seeking explanation from Noticee No. 1 with respect to the complaints received against Mr. B. Vijay Kumar Reddy and association of Noticee No. 1 with the said person. Pursuant to this, Noticee No. 1 vide its letter dated 02.04.2016 submitted that the total amount of Rs. 93.41 lakhs was received from NPS Services. Out of this, Rs. 61,15,000/- was received by Noticee No. 1 between 01.01.2015 and 06.04.2015 and Rs. 32,26,000/- was received prior to 01.01.2015. The same was duly transferred to the subscribers' account and proper reconciliation of money received has been done and transferred and this has been duly furnished also to NPS Trust. Statement of Transactions (SoTs) showing credit in 8665 subscribers PRAN Accounts was duly obtained from NSDL-CRA. The same was sent to subscribers' postal addresses and copies were submitted to NPS Trust along with letters dated 01.03.2016 and 14.03.2016. Further, Noticees denied about the presence of any unreconciled amount in total amount transferred from NPS Services as the entire amount was credited in the subscribers accounts and that there is no unjust enrichment to the Noticee No. 1 as the amount is credited in the NPS collection Account where from the funds are transferred only to the Trustee Bank. Moreover, no funds could be withdrawn or utilized for any purpose other than being transferred to the Trustee Bank. Additionally, if any amounts remained unreconciled, it was due to incomplete subscriber details, which were being addressed promptly to ensure there is no loss to any subscriber.