22/3/2018
PUNE (NEW
DELHI): The Ministry of Corporate Affairs has initiated strong action
against D S Kulkarni Developers Ltd and individuals for illegal fund diversions
in the garb of "related party transactions."
On a petition moved by the ministry, the National Company Law
Tribunal (NCLT) has barred the company as well as various individuals,
including key managerial personnel, from mortgaging their properties besides
freezing of securities, among other directions.
A senior ministry official said the NCLT order would serve as
a strong deterrent against entities indulging in fraudulent activities and the
strong message is that "don't take law lightly." Against the backdrop of instances of corporate frauds, the
ministry has invoked certain rarely used provisions in the Companies Act with
regard to Pune-based D S Kulkarni Developers case, according to officials.
The ministry, which is implementing the Act, has invoked
various sections including 241 and 242. These pertain to seeking relief from
the tribunal in cases where a company's affairs are being conducted in a manner
prejudicial to public interest.
The petition was filed by Serious Fraud Investigation Office
(SFIO) on behalf of the ministry against the company and 15 individuals. It was
submitted by the ministry that the company defaulted in repayments of term
loans, fixed deposits and statutory dues as well as perpetrating fraud against
the public at large by siphoning funds through related party transactions.
Sufficient material is available on record to show that the
respondents in the management of the company "fraudulently collected Rs
1,246 crore in the form of deposits from the public and loans from the
financial institutions as against the land bank worth of Rs 27 crore," the
order said. The money has gone to related parties in the name of advances and
loans, the order said, adding that the affairs of the company are being
conducted in a manner prejudicial to public interest.
By way of an ex-parte order, dated March 13, the NCLT has
restrained 11 individuals from "mortgaging or creating charge or lien or
third party interest or in any way alienating, the immovable and moveable
properties by them." Besides, they have been directed to disclose details
about their moveable and immoveable properties, including bank accounts, owned
by them in India or overseas.
Among others, Central Depository Services Ltd (CDSL) and
National Securities Depository Ltd (NSDL) have been directed to freeze
securities owned by these individuals. Following the NCLT order, leading
exchanges BSE and NSE have suspended trading in the shares of D S Kulkarni
Developers.
The case came to the notice of the ministry after a complaint
was forwarded by Sebi and subsequently Registrar of Companies (RoC) carried out
an inspection of the company. The inspection found various fraudulent
activities and in January, an SFIO probe was ordered by the ministry.
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