IndiaCSR News Network
MUMBAI: A shareholder of DLF has filed a writ petition in the Delhi High Court challenging the decision of the Securities and Exchanges Board of India (Sebi) to allow the company to raise money through qualified institutional placement (QIP) in May 2013. Ved Prakash Gupta, the petitioner, has asked why the capital market regulator allowed DLF to tap the market when it already knew the company was guilty of concealing material facts from shareholders during its initial public offer (IPO) in 2007 The court has given Sebi time till February 4 to respond. Gupta, in his petition, said Sebi’s investigation into the DLF IPO was completed by April 20, 2013. But, the regulator did not object to DLF raising more funds in May 2013 from the market, he said.
In October 2014, Sebi had banned DLF and its chairman KP Singh from accessing the capital markets for three years accusing them of engaging in fraud and unfair trade practices during its IPO.”If a regulator knows that a company was involved in fraud and unfair trade practices, how was it (the company) allowed to raise more funds?” Ankit Rajgarhia, the petitioner’s lawyer asked. “We are questioning Sebi on the propriety and not on technical grounds. Our another prayer is that the red herring prospectus of the QIP and due diligence by bankers too be investigated thoroughly.” DLF’s Rs 1,863-crore QIP was the largest in FY14. An email query to Sebi did not elicit any response. DLF did not respond to an email.
“It is not just the mere investigation, but the entire chain of process including showcause and hearing that has to be completed before the regulator arrives at any decision,” said JN Gupta, former Sebi official. Sebi had barred DLF and its promoter from the market alleging they had concealed facts in 2007 IPO that raised Rs 9,187.5 crore. DLF had failed to mention in its offer documents that one of its associate company had a criminal case against it in a land dispute.