The amount involved could be as high as around Rs 2,500 crore as there are a lot of depositors. However, the DSK case is quite new compared to the Nirav Modi and Vijay Mallya where fraud values are several times more than DSK but no actions have been taken on those respective bank officials that were very surprising since these are pretty old cases. Justice should be the same for everyone – be it common man or cases like DSK. The gullible investors are broken with no money in their pocket; some investors capitalised all their earnings on this project without having an iota of doubt about the consequences. The DSK Developers is a leading entity in Pune’s real estate sector that launched the DSK Dream City township project at Loni on the Pune-Solapur highway. The project involved 12,000 residential units and was worth Rs 8,000 crore (Rs 80 billion).
The first phase of the Dream City was handed over to the buyers in December 2017. But troubles had already begun for the group helmed by D S Kulkarni in October 2016, when it evaded on payments to its fixed deposit holders, which the company blamed on the slowdown in the realty sector. This was when the matter caught RTI activist Vijay Kumbhar’s attention. In October 2017, after his real estate projects stalled, cases were registered with the Pune Police against D S Kulkarni. He and his family were arrested by the Pune police and investigation are on, but in a strange development, the Economic Offences Wing (EOW) of Pune arrested Ravindra P. Marathe, the Chairman and Managing Director of Bank of Maharashtra in this case of fraudulent loans extended to Pune’s DSK Group. The EOW has also arrested the bank’s Executive Director Rajendra K. Gupta, Zonal Manager Nityanand Deshpande from Ahmedabad and former CMD Sushil Muhnot from Jaipur. The 83-year-old Pune-headquartered Bank of Maharashtra is ranked among the major public sector banks in India. They all are booked under various sections of the IPC and the Prevention of Corruption Act. As part of the probe into the cheating case against Kulkarni, it came to light that these bank officials schemed with DSKDL by misusing their powers and authority with dishonest and fraudulent intention to sanction and disburse the amount under the garb of a loan. Something similar happened in Nirav Modi and Vijay Mallya case too. But with prompt action by the police and other investigation authorities, DS Kulkarni and his wife Hemanti were arrested on the charges of cheating over 4,000 investors of over Rs 11.5 billion and diverting bank loans of nearly Rs 29 billion.
Maharashtra government had ordered attachment of more than 120 properties, 275 bank accounts and dozens of vehicles belonging to the owners and the company invoking the provisions of Maharashtra Protection of Interests of Depositors Act, 1999. In December 2017, he told the Bombay High Court that he would pay back Rs 50 crores (Rs 500 million), but didn’t. In January 2018, the company told the court that the amount was being transferred from overseas, but it didn’t happen. In February 2018, Kulkarni told the Court that the money was being raised through crowdfunding and would be returned, but again it was not done. The High Court then cancelled Kulkarni’s anticipatory bail and ordered his arrest.
As investigations continue into the alleged fraud, more skeletons tumbled out of DSK’s closet. For almost three decades, DS Kulkarni Developers Limited (DSKDL) was the byword for ethical business practices. This image was, in part, due to the persuasive motivational talks and videos of Deepak S Kulkarni, its promoter, which highlighted his rags-to-riches story and work ethic. When the going was good, people were happy to believe him, especially people from Pune, who have deposited large sums of their savings in his ‘fixed deposit (FD) schemes’. After all, the evidence of his success was visible in the group’s sprawling expansion into hospitality, power, education, automobile dealerships (Toyota has recently terminated its dealership with DSK) and even a professional football team. DSK is a Rs1,500 crore group with a land bank of thousands of acres.
This glowing entrepreneurial story started stumbling sometime in 2016 when the seemingly impossible happened and interest cheques of the DSK Group companies began to bounce. For the past year, investors have been gathering at DSK’s corporate office in Pune to demand their money back. Curiously, the company’s share price seems unaffected by its financial travails and has traded above Rs 30, until recently. When a video of Kulkarni scolding his staff for issuing worthless cheques went viral, he said that it only showed his sincerity and good intentions. He also attributes the Group’s massive financial mess to time lost in recovering from a road accident in 2016 and dull market conditions.
In general, DS Kulkarni’s office is always open to the depositors. Everybody gets to meet him and his wife; they openly admit to financial troubles and urge investors to give them time to sell assets and raise money to make payments. Investors are also told that if they file a complaint, the chances of getting money back are low. Although investors are upset, they seemed to be willing to give him more time to fulfill his promise. There is also a genuine fear that ham-handed action and arrests by the police or other authorities won’t help because the assets remain confiscated forever. That is probably why even an online petition seeking help from the Prime Minister has a large number of signatories who have chosen to remain anonymous. However, things are apparently not as simple as Kulkarni seems to suggest.
DS Kulkarni has told a large number of depositors to accept realty assets against the money owed to them. However, the flats are being offered in projects whose completion is doubtful and the rate quoted is unreasonably high. Moreover, if the project itself is secured against a borrowing, the legal title of the flat offered remains dodgy. DSKDL’s 2016 annual report shows that most projects have been secured against construction finance from housing finance companies such as Indiabulls Housing Finance, ICICI Housing Finance, etc. Around 10,000 people have lost their money and many of them are divested and clueless about their future. Since 2010, all his (DS Kulkarni’s) projects have stalled. They were just rotating money from one scheme to another scheme without returning it to investors.
Worse, they blew up the money on entertainment and travel.
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