Sebi did not follow procedure while taking action: DLF lawyers

One of the lawyers contended that Sebi did not give DLF opportunity to represent itself, which is mandatory under the FUTP law

Banned by Sebi from the market for three years, real estate major DLF today argued before the SAT that the regulator had not followed the Fraudulent and Unfair Trade Practices (FUTP) rules while penalising the company.

The Securities Appellate Tribunal is hearing DLF's plea against a Sebi order, passed in October, wherein the company and its six top executives were barred from securities markets for three years due to non-compliance to disclosure norms during its IPO seven years ago.

DLF lawyers today concluded arguments. Securities Appellate Tribunal's presiding officer J P Devadhar said it will hear Sebi's arguments from Monday.

Advocate Janak Dwarkadas, for DLF, contended that Sebi failed to furnish a post-investigation report under FUTP regulations and did not give DLF opportunity to represent itself, which is mandatory under the law.

Sebi, in its June 2013 show-cause notice, had accused DLF of "suppressing facts in the IPO offer document to defraud investors".

Advocate J J Bhat, representing some of the top DLF executives, including K P Singh, his son Rajiv Singh and daughter Pia Singh, said the notice did not speak about the role played by the directors in non-disclosure of information in the IPO offer documents.

"The Sebi Act does not provide for vicarious liability of directors," said Bhat.

Meanwhile, SAT today said it would hear the original complainant Kimsumk Krishna Sinha once it hears both Sebi and DLF. Yesterday Sinha had produced a Supreme Court order allowing him to become a party to proceedings before SAT.

The case before SAT relates to an October 13 Sebi order banning DLF, its chairman K P Singh and five other senior-most officials from the market for three years for not disclosing the names of two of its over 250 subsidiaries in the 2007 IPO documents. The company has challenged this ban.

The Sebi's action followed Delhi High Court's order to probe Sinha's allegation that one of the DLF subsidiaries -- Sudipti Estates -- and certain other persons duped him of Rs 34 crore in a land deal.