DLF in trouble yet again, Sebi to probe its Rs 10,000 cr IPO

Real estate firm DLF has landed itself in trouble once again. Market regulator SEBI on Thursday ordered an investigation into disclosure violations during its mega initial public offer (IPO) after a Delhi-based businessman alleged that he was duped of Rs 34 crore by DLF Limited and Sudipti Estates.

A few months ago the Delhi High Court had order SEBI to look into the entire matter and to actually see whether there is any merit in this case or not.

The probe order follows a Delhi High Court ruling on a complaint filed by Kimsuk Krishna Sinha in 2007 against the DLF Group and Sudipti Estates.“The Securities and Exchange Board of India (SEBI) shall investigate into the allegations levelled by the complainant, Kimsuk Krishna Sinha in respect of DLF Limited and Sudipti Estates Private Limited,” the market regulator said.

The Delhi High Court had in July directed the regulator to look into the complaint and pass an order within three months.

SEBI has decided to investigate DLF on disclosure violations during IPO and to find out whether it’s also violated any provisions of the Companies Act.

Infact SEBI said it will be issuing a formal order to appoint an investigating authority, which will then have to complete its investigations expeditiously. So, this is just one more legal problem.

SEBI said that the investigations would focus on the violations, if any, of the provisions of the erstwhile SEBI (Disclosure and Investor Protection) Guidelines, 2000 by the companies.

“A formal order would be issued appointing Investigating Authority…If any violations are brought out in the investigation, the SEBI shall proceed in accordance with law,” it said.

In the FIR lodged against Sudipti in Delhi, Sinha had alleged that the company and its directors’ agents had “lured and compelled” him to transfer certain plots of land and did not fulfill the promise of developing the land and providing him higher returns.

DLF, however, has maintained that Sudipti is a separate legal entity owned and controlled by different individuals.

However, Sinha had alleged that Sudipti, DLF Home Developers Limited and DLF Estate Developers Limited were sister concerns, inextricably linked and were part of the DLF Group.

DLF Ltd in a DRHP filed for a public issue in May 2006 had mentioned that Sudipti was its associate company. However, the DRHP was withdrawn and thereafter, it filed fresh a prospectus in January 2007, wherein Sudipti was not mentioned as an associate.

In addition, the CCI had imposed Rs 630 crore fine on DLF. The company is now appealing against that at the Competition Appellate Tribunal (COMPAT).

The Income Tax Department has laid claims to additional tax of nearly Rs 2,200 crore for two assessment years.

Watch video: There’s trouble in store for DLF. Market regulator SEBI has ordered an investigation into disclosure violations during its mega initial public offer

Agencies