DLF tells SAT Sebi didn’t follow norms in banning it from market

Real estate major DLF, banned by the Securities and Exchange Board of India (Sebi) from the stock market for three years, on Friday argued before the Securities Appellate Tribunal (SAT) that the market regulator had not followed Fraudulent and Unfair Trade Practices (FUTP) rules while penalising the company.

The SAT is hearing DLF's plea against a Sebi order passed in October, barring the company and its six top executives from securities markets for three years due to non-compliance with disclosure norms during its IPO seven years ago.

DLF lawyers concluded their arguments on Friday. The SAT's presiding officer J P Devadhar said it will hear Sebi's arguments from Monday.

Advocate Janak Dwarkadas appearing for DLF contended that Sebi failed to furnish a post-investigation report under FUTP regulations and did not give DLF an opportunity to represent itself.

In a June 2013 show-cause notice, Sebi accused DLF of "suppressing facts in the IPO offer document to defraud investors".

Advocate J J Bhat, representing some of the top DLF executives, including K P Singh, his son Rajiv Singh and daughter Pia Singh, said the notice did not speak about the role played by the directors in non-disclosure of information in the IPO offer documents.

"The SEBI Act does not provide for vicarious liability of directors," said Bhat.

Meanwhile, SAT said it would hear the original complainant Kimsumk Krishna Sinha once it hears both Sebi and DLF. Yesterday Sinha had produced a Supreme Court order allowing him to become a party to proceedings before SAT.

The case before SAT relates to a 13 October Sebi order banning DLF, its chairman K P Singh and five other senior-most officials from the market for three years for not disclosing the names of two of its over 250 subsidiaries in the 2007 IPO documents. The company has challenged this ban.

The Sebi action followed a Delhi High Court order to probe Sinha's allegation that a DLF subsidiary, Sudipti Estates, and certain other persons duped him of Rs34 crore in a land deal.