IN RE: DLF LIMITED Vs. STATE

JUDGEMENT

(1.) DLF Limited (hereinafter referred to as "DLF") came out with an Initial Public Offer ("IPO") in the year 2007 for issuance of 17,50,00,000 equity shares of Rs. 2 each at a price of Rs. 525 per equity share aggregating to Rs. 9187.5 crore. In respect of the said IPO, DLF had filed its draft Red Herring Prospectus (DRHP) dated January 2, 2007 with SEBI. Before the said IPO, DLF had filed a DRHP dated May 11, 2006 ("first DRHP") which was withdrawn by DLF and subsequently it filed the second DRHP dated January 2, 2007 ("second DRHP"). SEBI issued its observations on the second DRHP on May 7, 2007. Thereafter, DLF issued the RHP dated May 25,2007. The issue opened on June 11, 2007 and closed on June 14, 2007. The Prospectus was filed with Registrar of Companies on June 18, 2007. After the completion of allotment in the IPO, the shares of DLF were listed on Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. on July 5, 2007.

(2.) WITH regard to the above IPO of DLF, one Mr. Kimsuk Krishna Sinha ("Mr. Sinha") had filed two complaints with SEBI on June 4, 2007 and July 19, 2007. Mr. Sinha in his complaint dated June 4, 2007, inter alia, stated that Sudipti Estates Private Limited ("Sudipti") and certain other persons had duped him of Rs. 34 crore (approx.) in relation to a transaction between them for purchase of land, and he had registered an FIR No. 249/2007 dated April 26, 2007 at Police Station, Connaught Place, New Delhi against Sudipti, one Mr. Praveen Kumar and others in that regard. He also stated that Sudipti had only two shareholders namely, DLF Home Developers Ltd. ("DHDL") and DLF Estate Developers Ltd. ("DEDL") (both companies being the wholly owned subsidiaries of DLF) holding 5000 equity shares each. He further stated that Sudipti, DHDL and DEDL are sister concerns and are inextricably linked and these companies are a part of the DLF group. In view of the said allegations, Mr. Sinha requested that considering the imperative of safeguarding the interests of general public, the listing of DLF pursuant to the IPO be disallowed and immediate action be taken in this regard. Thereafter, vide his complaint dated July 19, 2007, Mr. Sinha had pointed out that DLF in its reply dated July 11, 2007 to him had denied its/subsidiaries' connection with Sudipti at that point of time. He further stated that DLF's claim of not having any association with Sudipti was false. Mr. Sinha in the said complaint requested SEBI to address his first complaint and immediately act thereupon.

(3.) AGAINST the said order dated April 9, 2010, Letters Patent Appeals were filed by Sudipti and DLF before the Hon'ble High Court and the operation of the said order was stayed by the Hon'ble High Court on July 6, 2010. Thereafter, the Letters Patent Appeals were disposed off by the Hon'ble High Court vide order dated July 21, 2011 directing SEBI to examine the matter. Pursuant to the directions of Hon'ble High Court, SEBI, vide an order dated October 20, 2011 ordered an investigation into the allegations levelled by Mr. Sinha in his complaints dated June 4, 2007 and July 19, 2007. The purpose of the investigation was to ascertain the violations, if any, of the provisions of SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("DIP Guidelines") read with corresponding provisions of SEBI (Issuance of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations") and the relevant provisions of the Companies Act, 1956 ("Companies Act").