SAT dismisses DLF complainant’s plea

By: |
Mumbai | December 11, 2014 1:03 AM

An appeals court on Wednesday dismissed an intervention application sought by Kimsuk Krishna Sinha...

An appeals court on Wednesday dismissed an intervention application sought by Kimsuk Krishna Sinha, a complainant in the matter pertaining to alleged fraud by DLF and its subsidiaries, and non-disclosure of material information by the real estate firm in its 2007-initial public offering (IPO).

Amit Sibal, son of former telecom minister Kapil Sibal and Sinha’s lawyer, argued that his client be made party to the case, saying that his client’s complaints lead Sebi to investigate the matter and release an order against the real estate company. Sinha has declared that DLF’s subsidiary Sudipti Estates and company personnel defrauded him in a land deal that cost him R34 crore.

The three-member bench of the Securities Appellate Tribunal (SAT), a quasi-judicial body, has adjourned the case to December 11, Thursday. The tribunal will hear the petition filed by DLF and its top officials who seek relief from a Securities and Exchange Board of India (Sebi) ban.
As part of the appeals process, the tribunal will also decide if the company may be allowed to raise R5,000 crore in non-convertible debentures (NCDs).

On October 10, Sebi barred DLF and its six top officials including chairperson KP Singh from accessing and otherwise buying, selling or dealing in securities for a period of three years for non-disclosure of “material information” and related party transactions between parent and subsidiary company in its draft red-herring prospectus (DRHP).

The troubled real estate developer moved SAT on October 17, challenging the three-year ban imposed by the market regulator for alleged irregularities in 2007-IPO through which the company raised R9,187 crore – the biggest public offering in the country at that time. On November 5, the tribunal granted interim relief to DLF and allowed the company to redeem R1,086 crore worth of funds locked in mutual funds towards payment of payment of loan installments and interest payments.

DLF’s debt stands at R20,369 crore as on quarter ending September 2014, shows Bloomberg data. The company, which owed R21,350 crore to its lenders at the end of December 2012, had to liquidate three of its non-core assets – a premium land parcel in central Mumbai’s Lower Parel, luxury hotel chain Aman Resorts and its wind energy business – picking up R4,889.2 crore.

In addition, the realty major raised R1,863 crore through an institutional placement programme (IPP) in May last year to comply with Sebi’s norms of minimum 25% public shareholding in listed companies.

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