DSK Defaults: Pune Police finally register FIR against DS Kulkarni and his wife Hemanti

Moneylife Digital Team
30 October 2017

After several months and innumerable complaints, the Pune Police has finally registered a first information report (FIR) against Deepak Sakharam (DS) Kulkarni, and his wife Hemanti, under the Maharashtra Protection of Investors and Depositors Act (MPID). One of the investors, Jitendra Mulekar, has registered the case against DS Kulkarni and Hemanti Kulkarni for cheating him for Rs4.40 lakh.

The Police has registered the FIR (no. 347/2017) under Section 3 and 4 of the MPID Act and under Sections 406, 420 and 34 of the Indian Penal Code.

“Earlier, whenever, some of the investors tried to lodge a complaint against the DSK group for cheating depositors, Mr DS Kulkarni, as if by magic, used to appear at the Police station and lure the investors with promise of repaying their money shortly. He used to tell them that putting him in jail would not help depositors get their money back. It was a convincing argument. Finally, an investor called Jitendra Mulekar has taken the lead in ensuring an FIR is lodged,” says right to information (RTI) activist Vijay Kumbhar, who has lead the fight to get depositors money back.

According to Mr Kumbhar, the DSK group has cheated depositors by raising deposits in the names of dummy companies, diverting bank loans for other project for personal gains, mortgaging useless land or mortgaging the same piece of land to different lenders. “DSK has also opened bank accounts in the name of fictitious companies, siphoned money from the publicly limited company (DSK Developers Ltd), and failed to pay government dues. If properly probed, several ‘interesting’ stories will emerge from the DSK defaults,” he added.

For almost three decades, DS Kulkarni Developers Ltd (DSKDL) was the byword for ethical business practices. People were fascinated by the rags-to-riches story of Deepak S Kulkarni, its promoter, and deposited large sums of their savings in his ‘fixed deposit (FD) schemes’. This story began to falter in 2016 after 30 years.

One investor, Gupte, says, “DSK has cheated so many poor investors, flat buyers, employers, contractors and everybody who has done business with him. Seems like the family has gulped all the money earned, using this fraud.”

Other investors, Neeraj, says, “I am one of the aggrieved flat buyers in the adhi ghar paise nantar (first home, pay later) scheme. To be honest, I have been naive when I entered into it but had no chance of coming out since I was losing money on that transaction. Now is even worse. Having discussed a loan of Rs32 lakh, I stand to lose that amount with no sight of the project being completed. Is there a way out from this legally?”

As pointed out by Moneylife, Mr Kulkarni, the group promoter, continued to fob investors with the promise to repay their money with interest by March 2017; it did not happen. Some say he has even threatened to commit suicide if investors filed a first information report (FIR) against him. However, neither Mr Kulkarni nor DS Kulkarni Developers.

In fact, DS Kulkarni Developers (DSKD) is mandated to update stock exchanges about every price sensitive information, especially media reports which quote significant inflow of funds or investment in the company. But not such promise that were routinely published by the media were ever part of DSKD’s disclosures to the two national exchanges.

The company’s 2016 annual report shows no default to banks (its bankers include State Bank of India, Syndicate Bank, Bank of Maharashtra, Union Bank of India, IDBI Bank, ICICI Bank and Vijaya Bank) and it has availed of construction finance from a set of housing finance companies against the security of many ongoing projects. There are no defaults to debenture-holders either. This suggests that DSKDL is careful to ensure no default to secured creditors while it has begun to default afterwards. This is exactly where the new rule of SEBI—about reporting defaults to the stock exchanges—will help protect investors by providing up-to-date information on the finances of a company.

Mr Kumbhar alleges involvement of some officials from banks in providing loans to DSK Group. “Due to mistakes from bank officials, even buyers and borrowers who opt for DSK’s ‘Get Home First and then Pay” scheme are in financial mess. Now banks are harassing such borrowers and DSK’s defaults are affecting credit ratings of these borrowers as well. Actually, government should recover this money from the salaries of bank officials, who gave almost 90% loan to DSK when there was not even 10% construction completed. I feel, the government should set up a special investigation team (SIT) to probe this entire fraud, which may be more than thousands of crores,” he added.

Media reports describe DSK as a Rs1,500-crore group with a land bank of thousands of acres.

In the below videos shot earlier in October 2017, Mr Kulkarni can be seen promising many things to investors at the Economic Offenses Wing of Pune Police.