Supreme Court Issues Notice To DLF, SEBI For Not Disclosing Key Information To Shareholders Through QIP Prospectus

The Supreme Court has issued notice to real estate developer DLF for suppressing key information in the Qualified Institutional Placement (QIP) prospectus meant for its shareholders.

The notice was issued after the court heard a petition which revealed how DLF allegedly suppressed key information regarding judicial proceedings against the largest chunk of land owned by it in Haryana.

The court has issued a notice to the Securities and Exchange Board of India (SEBI) which happens to be a party to the case.

Earlier, a petitioner on whose complaint the SEBI had stopped DLF promoters from accessing capital markets informed the Supreme Court that DLF failed to mention key legal cases related to violation of the Haryana Land Ceiling Act, 1972.

Incidentally, adverse orders were passed against DLF by the Punjab and Haryana High Court and the matter is now pending with the Supreme Court.

After the Supreme Court notice, DLF would have to file its response to the petition, which wants the company to return more than Rs 5,000 crore which it had raised through two qualified institutional placements earlier.

The petition has also sought a SEBI probe into the suppression of material information. It has also alleged that DLF failed to disclose amalgamation which renders one of DLF’s flagship subsidiaries liable in matters arising out of court orders with regard to M/s Aaliyah Real Estates.

According to the petition, in DLF’s prospectuses of 2006 and 2007, DLF New Gurgaon Home Developers (DNGHDPL) was listed as a subsidiary and a DLF associate. Also, DLF’s prospectus of 2013 shows that DLF held a 94.43% stake in DNGHDPL.

A probe was ordered into violation of land ceiling laws and other laws, which presumably include matters concerning benami purchases, licensing, stamp duty payment and transfer pricing issues, none of which was mentioned in DLF’s 2019 QIP prospectus.