Maharashtra Government Opposes Buyers' Claim On DSK's Dream City Project
It appears that the difficult times for homebuyers is far from over as now the Maharashtra government is opposing the investors' claim over DSK Developers Dream City project in Phursungi. While these investors have the plot allotment letter provided by the builder, the government has filed an application in the court stating that the land is mortgaged to the Credestrial trusteeship company and the court does not have the jurisdiction to pass the ruling over the investors' claim on the land. The application also said that the allotment letter provided to the buyers are based on a fake layout prepared by Deepak Sakharam Kulkarni and his wife. The land was mortgaged to the Credestrial after SEBI imposed the condition that the developer can raise the money from the public and if the firm failed to repay the money of the debenture holders with interest, then the company will have the right to sell the property and repay money to the debentures.
The court will hear the application on August 19, 2019.
In yet another development, Makrand Kulkarni, the brother of DSK Group Chairman Deepak Sakharam Kulkarni, was arrested in connection with the Rs 2,000-crore fraud on August 13, 2019. Kulkarni is held for selling a land parcel at an inflated price and misappropriation of Rs 184 crore through the deal between 2006 and 2008.
It was in February 2019 when the Enforcement Directorate (ED) has attached assets worth Rs 904 crore of DSK Group for defrauding small investors. Reportedly, eight partnership firms across Mumbai, Pune and Kolhapur were formed to raise money from investors between 2006-17 — aboutRs 1,129 crores was collected from over 35,000 investors. The money was then laundered to the bank accounts of the owners and four of their firms in the US and India.
In a fresh development, the economic offences wing (EOW) of Kolhapur police has filed a charge sheet against Deepak Sakharam Kulkarni, his wife and son for fraud worth crores of rupees. The group has also been accused of irregularities and siphoning off funds received by investors. Kulkarni had recently submitted before the court in a recent court hearing and promised to complete all the pending projects within two years as well as return the money to troubled investors.
The developer firm has been courting trouble for some time now. Previously, on the basis of complaints from over 600 homebuyers, in November 2018, the Pune Police's EOW conducted searches at the offices and residence of Kulkarni had written to banks to freeze around 70 accounts linked to the firm. Now, the developer claims that with the assistance of the Maharashtra Housing and Area Development Authority (Mhada), project completion should not face any roadblocks. Speaking to media, Kulkarni also said that he would pay Rs 501 crore to help the Mhada complete the homes. Meanwhile, special court prosecutor Pravin Chavan on January 25 had submitted a list of 143 properties that could be auctioned to recover the money, reasoning that if the projects were unfinished in four years, there could be no way it could be finished now.
On February 4, 2019, a group of investors had filed an application before the special court demanding DS Kulkarni and his wife Hemanti for a hearing. Altogether 27 criminal writ petitions in the Bombay High court have been submitted that requested a settlement plan. The petitioners also want the government to look at developing these properties and not auction them, which could bring in a revenue of Rs 4,000 crore to the government that could be used to compensate affected homebuyers.
Three senior Bank of Maharashtra officials have also been discharged from their duties for an alleged violation of extending loans of crores to the group which was facing prosecution for economic fraud.
The story so far
Last year, the firm was booked under Indian Penal Code sections 409 (criminal breach of trust), 120B (criminal conspiracy) and relevant sections of Prize Chits and Money Circulation Schemes (Banning) Act, 1978, had been added in the first information report (FIR). Sources from the EOW said that they had notified agencies like the Enforcement Directorate (ED), Securities and Exchange Board of India (SEBI) and sub-registrar offices, regarding the case against DS Kulkarni, popularly known as DSK. “Since DSK is a listed company, SEBI was informed. Since the ED looks after money laundering, they, too, were notified about a case and to prevent further property dealings of the group, sub-registrar offices where the property transactions are registered, have also been informed,” said a senior police official from the EOW.
A case was registered against DS Kulkarni and his wife Hemanti on October 28, 2018 on a complaint by 65-year-old Jitendra Mulekar that he did not get back his investment from the developer. Following the first complaint by Mulekar, police received scores of complaints from depositors who claimed of not getting their money back. Based on the complaints, searches were carried out at the developer's offices and residence on November 2, in the city to scrutinise the documents.
According to some complainants, there are around 8,000 depositors who have invested with the group's fixed-deposit scheme but they neither got their money nor the interest from the developer. For the past several months, all these investors, largely pensioners, had been queueing up at the developer's office in Pune.
What should homebuyers expect
While the ED has attached properties worth Rs 904 crore under the Prevention of Money Laundering Act (PMLA), issues arising from this situation may lead to a longer wait for homebuyers expecting their dues. All the cases against the DSK Group, in Pune, Mumbai or elsewhere may be transferred to a PMLA court in Mumbai. On the other hand, the National Company Law Tribunal (NCLT) has restrained any third-party from creating an interest in properties owned by the DSK group.