Moneycontrol Bureau
Securities Appellate Tribunal (SAT) has quashed Securities and Exchange Board of India's (SEBI) order against DLF's three-year ban from capital markets, stating that the market regulator is not justified in condemning the real estate developer in conducting its business. Shares of DLF soared 9 percent intraday on Friday after the tribunal's order.
SAT further said that adequate disclosures were made by DLF in 2007 IPO and there was no shortcoming noticed in the prospectus. “SEBI should not be influenced by whistleblowers. There is over-regulation by SEBI on DLF,” SAT observed.
DLF had made a plea against a SEBI ruling that barred the realtor and its six top executives, including chairman K P Singh, from markets for three years. SAT had reserved its order last month on appeals filed by DLF, Singh and five others, including his son Rajiv Singh and daughter Pia Singh. The SEBI had passed an order in October last year after finding them guilty of "active and deliberate suppression" of material information at the time of its IPO in 2007, thus misleading the investors.
While the October order did not include any monetary penalty, the Sebi passed another directive last month, in the same case, wherein penalties totalling Rs 86 crore were imposed on DLF, its top executives and a host of related persons and entities including spouses of some executives who were "housewives".
The SEBI order passed in October was challenged by DLF the same month before the tribunal. DLF's IPO in 2007 had fetched Rs 9,187 crore, the biggest IPO in the country at that time. Last month, the SEBI had slapped fines worth Rs 86 crore on DLF, its top executives, their family members and various other related entities for entering into "sham transactions" to mislead IPO investors.
At 12:43 hrs DLF was quoting at Rs 158.00, up Rs 9.05, or 6.08 percent on the BSE.
Reacting to the news, Gopal Jain, senior advocate, Supreme Court says penalty usually is imposed if there is an inflection or a violation. If there is no violation or inflection then no penalty should be imposed, he says.
"We don’t know whether the order has dealt with it but that is the position in law. Consequence therefore should be there should be no penalty. However, we have to read the order in its entirety but from what was mentioned earlier it looks as if they have said that there will be non-disclosure," Jain told CNBC-TV18.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
