The financial anarchy at DS Kulkarni Enterprises is becoming messier day by day. After defaulting on repayments to thousands of investors, DS Kulkarni & Co, a subsidiary of DS Kulkarni Developers Ltd, had stopped paying all pre-monthly instalments as per agreement for the home loan taken by buyers in its projects. Since DS Kulkarni & Co has defaulted in repaying the instalments, buyers are being asked by the lenders to pay pre-EMIs within seven days that too when there is no guarantee that the project would be completed on time or no.
Pune-based right to information (RTI) activist Vijay Kumbhar, who has been leading the fight of fixed deposit holders in DSK, shared one such notice with Moneylife. In the notice, Tata Capital Housing Finance Ltd, says, "Under the promotional scheme launched by the Developer (DS Kulkarni & Co- for its DSK Chaitraban project at Pirangut near Pune), the said Developer had offered to make payment of the pre-monthly instalment interest (MII) on your behalf to us with respect to the home loan facility availed by you. Notwithstanding such arrangement, you being the borrower under the home loan agreement are liable to make payment of such pre-MII/MI. This is to bring to your notice that the Developer has defaulted in making payment of the pre-MII. In view of the aforesaid default, we hereby call upon you to make payment of the outstanding pre-MII within a period of seven days from the date of this notice..."
Our mail sent to Mr Kulkarni remained unanswered till writing this story. We will update this story with his response as and when we receive it.
Earlier in June 2017, CARE Ratings reduced its rating to CARE D from CARE C with negative outlook on the non-convertible debentures worth Rs111.59 crore and fixed deposits of Rs33.86 crore issued by DS Kulkarni Developers. "The revision in the rating of instruments is on account of inability of the company to service its interest obligations on due date on Option I and Option IV of its Non- Convertible Debentures as per the company’s intimation to Stock Exchange. The likely delays are on account of deterioration in overall financial risk profile and stretched liquidity position of the company," the ratings agency had said, while explaining rational behind the downgrade.
The issue here is not the lender calling to make payment, but the borrower being asked to make payment for a project that is under-construction or may never get completed due to the default of the developer. The most prominent reason in such cases is the builder or developer's inability to meet financial obligations for completing the project. Many a times, it was found that the developer had used the advance payment collected from buyers to purchase another land or to invest in other project. In addition, several developers are facing legal issues that make life difficult for ordinary buyers.
Especially, those who had taken a home loan had no other option but to repay it irrespective of whether the project will be completed or no. Even when there is a delay in construction, the buyer has to keep paying EMIs without even knowing when it will be completed. This is double whammy for home loan borrowers as they are not sure if they will ever get possession of their dream house and yet had to meet to repayment obligations.
The lender may be right claiming that as per the agreement, the borrower has to repay the loan along with interest. However, in cases like DSK where the developer has agreed to pay interest part or pre-EMIs, there could be a tri-party agreement between the developer, buyer and the lender. In such cases, why only the buyer is being made to pay the instalments for no fault of his/her? Why cannot the lender initiate action against the developer, who failed to meet its obligations?
There are thousands of borrower facing similar issues. Hope their voice reaches to the authorities soon and there is some action.