Bengaluru: A city civil court recently directed the former chairman of Karnataka State Handicrafts Development Corporation Ltd (KSHDCL) to repay Rs 44.1 lakh for misusing public funds.The controversy dates back to Nov 2020, when govt appointed Beloor Raghavendra Shetty, a 42-year-old resident of Dollars Colony, as director and chairman of KSHDCL. Established in 1964, the corporation was tasked with preserving and promoting Karnataka’s handicrafts heritage and supports more than 50,000 artisans directly and indirectly.During his tenure, Shetty received a monthly remuneration package of Rs 1.5 lakh, which included salary, staff travel, house rent and courtesy allowances. The payments totalled Rs 27.4 lakh over the course of his appointment.What state govt did not know and what Shetty had carefully concealed, was that his Director Identification Number (DIN) had been cancelled by central govt in 2016 for failing to file mandatory KYC compliance annually. Under Companies Act 2013, a person without a valid DIN cannot legally serve as a director of any company in India. Shetty was already a director of two private companies.What followed was a nearly two-year tenure that cost the corporation dearly on multiple fronts, probe revealed. Shetty appointed his own secretary, assistant, helper and driver and had their salaries routed directly through the corporation’s accounts. He claimed travel allowances for air trips to Mumbai, Secunderabad, Delhi, Kolhapur and Mangalore between Nov 2020 and Feb 2021, but did not file a single report to the board on any of these visits. Three of the trips were traced to temple towns — Tirupati and Kolhapur — with no official purpose.His Dubai visit for a trade fair cost the corporation Rs 1.9 lakh. He also removed handicraft articles worth Rs 3.1 lakh from KSHDCL’s MG Road showroom without payment, depriving the corporation of sale proceeds from goods meant for public sale, probe revealed.Then came the late-night accident. On Aug 30, 2021, a corporation-provided Toyota Innova was involved in a collision at Hiriyur town at 11.30pm while Shetty was travelling with a friend — with no official duty on record. The corporation spent Rs 10.8 lakh repairing the vehicle.When state govt removed Shetty from his post in July 2022, the managing director began reviewing records and found his DIN missing from all statutory filings. A letter to registrar of companies confirmed the cancellation of Shetty’s DIN.Investigation revealed that Shetty held two PAN cards — an offence under Section 272B of Income Tax Act — and had more than 30 criminal cases pending across courts in Bengaluru and elsewhere, none of which he disclosed at the time of appointment. His passport, obtained using a letter from the corporation’s own managing director, was subsequently impounded by the Regional Passport Office in Nov 2022.To get its funds back, the corporation filed a recovery suit in April 2023, seeking Rs 44 lakh as the total amount paid out during Shetty’s tenure, along with 18% interest. Shetty never appeared before the court, was declared ex parte, and left the plaintiff’s evidence unchallenged.The court observed that the corporation’s funds came from the exchequer and were, therefore, public money. It held that Shetty had concealed the fact that he was disqualified from serving as director and had continued to receive payments from the corporation. The court described his actions as corrupt and ruled that the money he received did not legally belong to him and must be recovered.The court, presided over by XLIII additional city civil and sessions judge Shivanand Maruti Jipare, on June 15, ordered Shetty to repay the full suit claim of Rs 44 lakh with interest at 6% per annum from the date of filing of the suit until realisation, with costs.
