SAT was hearing an appeal filed by DLF challenging a Sebi order that barred DLF and six of its executives from capital markets for 3 years after finding them guilty of concealing information while selling shares to public in 2007. Photo: Priyanka Parashar/Mint
Mumbai: The Securities Appellate Tribunal (SAT) on Friday quashed a three-year trading ban imposed by Securities and Exchange Board of India (Sebi) on DLF Ltd and six of its top executives.
“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 was reading out the majority view of SAT members.
The minority view of the tribunal had proposed a six-month ban on the real estate developer and it top officials since the date of the Sebi order. However, this view was rejected by the majority of SAT members.
“We completely set aside the Sebi order,” said Singh expressing the majority view.
DLF shares surged as much as 8.8% to Rs.162 on Friday after the SAT ruling.
“We welcome this order and have full faith in the country’s judicial system. We are in the process of studying this order and will comment accordingly,” said a DLF spokesperson.
Sebi’s lawyers said the market regulator will appeal against the SAT ruling in the Supreme Court.
SAT was hearing an appeal filed by DLF Ltd challenging a 13 October Sebi order that barred DLF and six of its executives from capital markets for three years after finding them guilty of concealing material information while selling shares to the public in 2007.
On 26 February, Sebi imposed a total penalty of Rs.86 crore on DLF, the company’s top officials and some of its subsidiaries, after finding them guilty of engaging in unfair trade practices.
While DLF has been directed to pay a total penalty of Rs.26 crore, a similar amount of penalty has been imposed on seven top officials of the company—chairman K.P. Singh, Rajiv Singh, Pia Singh, T.C. Goyal, Ramesh Sanka, G.S. Talwar and Kameshwar Swarup.
Sebi has also imposed a total penalty of Rs.34 crore on Sudipti Estates Pvt. Ltd and 33 other entities, including DLF subsidiaries DLF Home Developers Ltd, DLF Retail Developers Ltd and DLF Estate Developers Ltd for allegedly engaging in fraudulent and unfair trade practices to reap disproportionate gains.
A Sebi probe found that DLF had camouflaged its association with three subsidiaries—Felicite Builders and Construction Pvt. Ltd, Shalika Estate Developers Pvt. Ltd and Sudipti Estates Pvt. Ltd—and material information had been suppressed in the red herring prospectus of DLF, which went public in 2007.
The initial public offering (IPO) raised at least Rs.9,187.5 crore, which was the largest IPO till then.
On 6 November, SAT allowed DLF to redeem Rs.1,806 crore in mutual fund holdings to service outstanding loans till 31 December. DLF has debt of over Rs.20,000 crore.
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