Realty firm DLF, Executives Barred from Market for 3 years


MUMBAI: Stock market regulator Sebi cracked down Monday on India’s biggest realty company DLF by barring six top executives, including promoter-chairman KP Singh, from accessing the securities market for three years, choking its options to raise fresh funds.

dlf logoThe move, linked to disclosure lapses in 2007 when DLF went public and listed on exchanges, is the latest in a series of setbacks for the company credited with building Gurgaon as a corporate and residential hub on the barren Aravallis, just outside the Capital.

“I find that a case of active and deliberate suppression of information to mislead and defraud the investors in the securities market in connection with the issue of shares of DLF in its IPO is clearly made out,” Securities and Exchange Board of India’s (Sebi’s) whole-time member Rajeev Agarwal said in his 43-page order.

Sebi has cracked down on the biggest real estate player of the country by barring the company and its top executives, including Singh, from accessing the securities market for three years.

In 2007, DLF went public in a record-breaking initial public offering of Rs. 9,187 crore, India’s largest at the time.

india sanitation toilet first summit in delhiThe real estate giant has faced a number of problems in recent years, including angry lawsuits by customers upset with project delays and political controversies surrounding the company’s alleged links with Robert Vadra, son-in-law of Congress president Sonia Gandhi, whose party lost power earlier this year.

Responding to the order, the company said, “DLF will defend itself to the fullest extent against any adverse findings and measures contained in the order passed by Sebi. DLF has full faith in the judicial process and is confident of vindication of its stand in the near future.”

It was unclear how the firm’s lenders, often the real estate industry’s lifeline, would react to the investigation that looked into charges of failure by the company to properly disclose its relationship with subsidiary firms.

“It can be very damaging for the company,” said lawyer Hiroo Advani. “This could lead them to struggle to complete ongoing projects. Also, if banks start calling in their loans, it would further compound the adverse impact.”

The ruling could also have an adverse impact on the firm’s stock. News of the Sebi ban broke after trading had closed on Indian stock exchanges, when DLF shares were down 3.7% at  Rs. 146.70 on the Bombay Stock Exchange.

The order came after a four-year probe into the process of share transfer by three DLF subsidiaries in three other allegedly related firms — Sudipti, Shalika and Felicite.

In April 2010, the Delhi high court had asked Sebi to look into the complaint of one Kimsuk Krishna Sinha on the dealings. Calling the share transfer process a “sham transaction”, Sebi said the banned executives employed “a plan, scheme, design and device to camouflage the association” of DLF with these three entities.

This is the second setback for the Delhi-based developer in two weeks. Last week, the Delhi HC dismissed the company’s petition seeking a stay on investigations by the anti-trust regulator Competition Commission of India into allegations of anti-competitive practices.

DLF executives barred by Sebi include KP Singh’s son Rajiv Singh (vice-chairman), daughter Pia Singh (whole-time director),   TC Goyal (managing director), Kameshwar Swarup and Ramesh Sanka. All these people, including KP Singh and his two children, were part of the top management at the time of filing IPO documents.

About G S Talwar, also a non-executive director at that time, Sebi said it could not be established whether he was involved in day-to-day operations and was therefore given the “benefit of doubt”.

In a statement, the company, however, reassured “investors and all other stakeholders that it has not acted in contravention of law either during its initial public offer or otherwise”.

“DLF and its board were guided by and acted on the advice of eminent legal advisors, merchant bankers and audit firms while formulating its offer documents,” the release said.

(Hindustan Times, 13 October 2014)

Please follow and like us:



Previous article4,600 Sahara Investors Claim Refund from SEBI
Next articleIndia’s sanitation campaigns have cost 40 times Mars mission budget
India CSR Network
India CSR Network is India's biggest and most trusted news portal in the domain of CSR & Sustainability. India CSR welcomes stories, statements, updates, reports on issues that interest you. Feedback, comments will make it more purposeful and resourceful. It is designed and maintained by India CSR Group. Contents are non-fiction. Though all efforts have been made to verify the accuracy, the same should not be construed as a statement of law or used for any legal purposes. In case of any ambiguity or doubts, readers are advised to verify with the source(s). Statement, articles, views and contributions can be sent to