SAT quashes SEBI’s 3-year trading ban order against DLF

Moneylife Digital Team 13 March 2015

Calling a three year ban on DLF and its top six executives as 'over-regulation', a majority view of the three-judge SAT bench quashed SEBI's order

The Securities Appellate Tribunal (SAT) on Friday quashed and set aside the order issued by market regulator Securities and Exchange Board of India (SEBI) against DLF Ltd and its directors including the group's executive chairman Kushal Pal (KP) Singh.

A majority view of the three-judge bench ruled that SEBI's order against DLF was a case of over-regulation in the capital markets. “The respondent’s (SEBI) order is not pragmatic. The order is like a troubled sea... hence it is quashed and set aside,” said Jog Singh, member of SAT, who read out the majority view of SAT members.

Last year in October, SEBI had barred the realty company and its six top executives, including Singh, from markets for three years. Other than Singh, who is the executive chairman of DLF, SEBI barred Rajiv Singh, vice chairman and son of KP Singh, TC Goyal, managing director, Pia Singh, whole time director and younger daughter of the DLF chief, Kameshwar Swarup, executive director for legal, GS Talwar, director and son-in-law of KP Singh and Ramesh Sanka, chief financial officer (CFO) of DLF.

In an order issued on 10 October 2014, Rajeev Kumar Agarwal, whole time member of SEBI, said, "...the process of share transfer of three subsidiaries of DLF in Sudipti Estates Pvt Ltd, Shalika Estate Developers Pvt Ltd and Felicite Builders & Construction Pvt Ltd was through sham transactions as alleged in the show cause notice (SCN) and that the Noticees employed a plan, scheme, design and device to camouflage the association of DLF with its three subsidiaries, namely, Felicite, Shalika and Sudipti. In this case under such plan, scheme, design and device, the Noticees suppressed several material information in the draft Red Herring Prospectus (RHP)/ Prospectus of DLF and actively concealed the fact about filing of FIR against Sudipti and others. In the facts and circumstances of this case, I find that the case of active and deliberate suppression of any material information so as to mislead and defraud the investors in the securities market in connection with the issue of shares of DLF in its initial public offering (IPO) is clearly made out in this case."

Last month, SEBI imposed a total penalty of Rs86 crore on DLF, the company’s top officials and some of its subsidiaries, after finding them guilty of engaging in unfair trade practices.

In 2007, Kimsuk Krishna Sinha, a businessman from Delhi had alleged that DLF and its directors and agents had lured and compelled him to transfer certain plots of land and did not fulfil the promise of developing the land and providing him higher returns.

Sinha had alleged that Sudipti, DLF Home Developers Ltd and DLF Estate Developers Ltd, were sister concerns and were part of the DLF group.

DLF, however, said that Sudipti was a separate legal entity, owned and controlled by different individuals. The construction major in its DRHP, filed for a public issue in May 2006, had mentioned that Sudipti was its associate company.

The DRHP however, had been withdrawn and a fresh prospectus was filed in January 2007, in which Sudipti was not mentioned as an associate.

Following a 2011 direction of the Delhi High Court to look into Sinha's complaint against the DLF Group and Sudipti Estates, SEBI passed an order to carry out the investigation into the allegations levelled by Sinha.

At 2.24pm Friday, DLF was trading 7% higher at Rs159 on the BSE, while the 30-share Sensex was marginally down at 28,790.

Comments

User

R Balakrishnan

1 decade ago

Smells. Simply tells me that money can buy anything. Sad state of affairs. But must confess that nothing good can come ever from SEBI.

integrity

Replied to R Balakrishnan comment 1 decade ago

Yes! SEBI needs to be consistent. They had refused to take up the matter of fraud by Sahara credit cooperative society.
But SEBI alone can not be blamed