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A Mumbai special PMLA court declined Encore Asset Reconstruction Company Pvt Ltd's request to release and auction several mortgaged properties linked to the DSK Group, citing ongoing investigations and attachments under the PMLA and MPID Act. The court highlighted that allowing an auction could harm thousands of investors and depositors who suffered losses. The plea was considered premature as charges in the PMLA case have not been formally framed, and MPID proceedings are still active. The decision underscores careful judicial management of high profile financial cases.
A special court in Mumbai recently rejected Encore Asset Reconstruction Company Pvt Ltd's plea to release and auction properties associated with the DSK Group, which are under investigation in a prominent money laundering and financial fraud case. The judge pointed out that these properties are currently attached by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) and by the Maharashtra Protection of Interest of Depositors (MPID) Act. The attachments aim to protect depositors interests and prevent misuse of assets while legal proceedings continue. Advertisement
The court stressed that permitting an auction at this stage could lead to irreparable loss for investors and depositors who had been financially impacted by the alleged misconduct of DSK Group companies. It also noted that formal charges in the PMLA case have not yet been framed, and MPID adjudication processes are still underway, making the ARC's request premature.
Encore ARC, acting as the assignee of credit facilities initially sanctioned by Kalyan Janata Sahakari Bank Ltd to D S Kulkarni Developers Pvt Ltd and other associated entities, had argued that as a secured creditor under the SARFAESI Act, it should be allowed to enforce its security interest. The company emphasized that the mortgaged properties pre dated the alleged offences and were not proceeds of crime. It also offered to deposit any surplus proceeds from a potential auction with the ED.
The Enforcement Directorate, the accused parties, the Economic Offences Wing, and authorities under the MPID Act opposed the plea. They argued that the attachments were necessary to safeguard investors and depositors until investigations and court proceedings reach their conclusion.
The properties in question were mortgaged to secure loans with outstanding dues exceeding INR 19.52 crore. FIRs registered in late 2017 alleged cheating and criminal breach of trust by DSK and related entities, leading the ED to file an Enforcement Case Information Report (ECIR) in early 2018. The ED provisionally attached the assets in 2019, a move subsequently confirmed by the adjudicating authority.
The DSK Group's legal challenges have been ongoing for several years, involving allegations of economic fraud affecting banks, investors, and homebuyers across multiple states. Investigations, attachments, and court proceedings have continued through multiple legal forums, reflecting the complexity and scale of the financial irregularities linked to the group.
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