DSK Group's depositors may have to wait longer for dues
A special MPID court in Pune is already hearing the state’s plea for public auction of 143 “free hold” properties of developer D S Kulkarni, alias DSK, and his group.
The affected depositors may find themselves waiting longer than expected for the recovery of dues considering the legal issues arising from the Enforcement Directorate’s (ED) recent attachment of assets worth Rs 904 crore of the DSK group under the Prevention of Money Laundering Act (PMLA).
A special MPID court in Pune is already hearing the state’s plea for public auction of 143 “free hold” properties of developer D S Kulkarni, alias DSK, and his group.
Legal experts said with the ED attaching the same properties the state had attached in May last year under the MPID Act (a state law), the action under PMLA, a central enactment, will now prevail. They said all cases against DSK group, in Pune or elsewhere, may get transferred in due course to the designated PMLA court in Mumbai.
The ministry of company affair’s Serious Fraud Investigation Office (SFIO), which is probing the DSK group for violation of Company Law provisions, also has the powers to attach properties. A team of SFIO officials is supposed to interrogate DSK, his wife, Hemanti, their son, Shirish, and five others arrested accused in the Yerawada jail on February 18 and 19. Even the chargesheet to be filed by the SFIO may be transferred to the PMLA court, the experts said.
“The National Company Law Tribunal’s western region bench in Mumbai has ordered a restrain on creating any third-party interest in the properties held by the DSK group,” said Chinmay Inamdar, one of the lawyers representing DSK in the Pune court.
“The issue of whether the 143 properties are ‘free hold’ or not is yet to be settled. These properties belong to the DSK Developers Limited (DSKDL), a listed company, in which the shareholders have the first stake. Issues of conflict are bound to arise from the attachment by two different agencies,” he added.
Special public prosecutor Pravin Chavan told TOI, “The depositors’ wait may get prolonged only to the extent of the period for transfer of files from the Pune court to the PMLA court as and when such situation arises. Till then, the Pune court will continue to hear the matter and there won’t be any impact on the proceedings here.”
He said, “The ED has provisionally attached almost the same properties (barring a Rs22 crore property in the US and four-five other properties of Shirish) the state attached under the MPID Act. The ED now has 30 days to get this provisional attachment confirmed by an adjudicating authority and, thereafter, 60 days to file a chargesheet in the PMLA court.”
Chavan added, “In that case, the ED’s joint director may move a plea before the Pune court under section 44 (1) (C) of the PMLA for transfer of the case to the designated court in Mumbai, or the accused can move the Bombay high court for transfer of the case from Pune to the Mumbai court. The special prosecutor will also have a similar option to exercise.”
The special public prosecutor said the scope of the ED’s investigation was much wider and might increase the difficulties of the accused in explaining the money trail as the onus of such explanation under the PMLA was entirely on the accused, unlike under the MPID Act where the onus lies on the prosecution.
He said, “The state can press before the PMLA court that the first claim ought to be of the depositors in the case of properties acquired through depositors’ money, subject to the ED’s verification of all loan transactions between banks and DSK group, and whether the money was used for the purpose of loan.”
[Courtesy: TOI]
The affected depositors may find themselves waiting longer than expected for the recovery of dues considering the legal issues arising from the Enforcement Directorate’s (ED) recent attachment of assets worth Rs 904 crore of the DSK group under the Prevention of Money Laundering Act (PMLA).
A special MPID court in Pune is already hearing the state’s plea for public auction of 143 “free hold” properties of developer D S Kulkarni, alias DSK, and his group.
Legal experts said with the ED attaching the same properties the state had attached in May last year under the MPID Act (a state law), the action under PMLA, a central enactment, will now prevail. They said all cases against DSK group, in Pune or elsewhere, may get transferred in due course to the designated PMLA court in Mumbai.
The ministry of company affair’s Serious Fraud Investigation Office (SFIO), which is probing the DSK group for violation of Company Law provisions, also has the powers to attach properties. A team of SFIO officials is supposed to interrogate DSK, his wife, Hemanti, their son, Shirish, and five others arrested accused in the Yerawada jail on February 18 and 19. Even the chargesheet to be filed by the SFIO may be transferred to the PMLA court, the experts said.
“The National Company Law Tribunal’s western region bench in Mumbai has ordered a restrain on creating any third-party interest in the properties held by the DSK group,” said Chinmay Inamdar, one of the lawyers representing DSK in the Pune court.
“The issue of whether the 143 properties are ‘free hold’ or not is yet to be settled. These properties belong to the DSK Developers Limited (DSKDL), a listed company, in which the shareholders have the first stake. Issues of conflict are bound to arise from the attachment by two different agencies,” he added. Special public prosecutor Pravin Chavan told TOI, “The depositors’ wait may get prolonged only to the extent of the period for transfer of files from the Pune court to the PMLA court as and when such situation arises. Till then, the Pune court will continue to hear the matter and there won’t be any impact on the proceedings here.”
He said, “The ED has provisionally attached almost the same properties (barring a Rs22 crore property in the US and four-five other properties of Shirish) the state attached under the MPID Act. The ED now has 30 days to get this provisional attachment confirmed by an adjudicating authority and, thereafter, 60 days to file a chargesheet in the PMLA court.”
Chavan added, “In that case, the ED’s joint director may move a plea before the Pune court under section 44 (1) (C) of the PMLA for transfer of the case to the designated court in Mumbai, or the accused can move the Bombay high court for transfer of the case from Pune to the Mumbai court. The special prosecutor will also have a similar option to exercise.”
The special public prosecutor said the scope of the ED’s investigation was much wider and might increase the difficulties of the accused in explaining the money trail as the onus of such explanation under the PMLA was entirely on the accused, unlike under the MPID Act where the onus lies on the prosecution.
He said, “The state can press before the PMLA court that the first claim ought to be of the depositors in the case of properties acquired through depositors’ money, subject to the ED’s verification of all loan transactions between banks and DSK group, and whether the money was used for the purpose of loan.”
[Courtesy: TOI]
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