Kimsuk Krishna Sinha, whose complaint led SEBI to impose a ₹85-crore fine on DLF and its associates, has now filed a plea in the Supreme Court alleging that the market regulator erred in imposing a lesser penalty against the real estate company. According to his plea, DLF should have been asked to pay ₹7,492.77 crore.
Sinha has filed an application with the apex court to allow him to place facts and documents on record to show DLF and associates made gains of around ₹2,500 crore through alleged fraudulent activity. Since the penalty, according to the SEBI Act, should be three times its profits, DLF should be asked to pay accordingly, said the plea.
Disclosure of facts
DLF was found guilty by SEBI in 2015 of fraudulent and unfair trade practices with regard to non-disclosure of material facts in its IPO filings in 2007. In its 2015 order, SEBI’s adjudicating officer Sunil Kumar had said “there was no material on record to assess the amount of loss caused to investors or the amount of disproportionate gain made by the notices.”
Sinha’s application cites Section 15H(A) of the SEBI Act, which states that penalty for fraudulent and unfair trade practices should be ₹25 crore or three times the profit made by the offender through such fraud or unfair trade practice, whichever is higher.
“We have filed this application with the SC and requested the court to direct SEBI to take a fresh look since the penalty could be much higher,” said Saurabh Suman Sinha, Sinha’s advocate.
The application alleges that 4,100 acres of the 4,575 acres (90 per cent) of land held by DLF was in violation of the Haryana State Land Ceiling Act, 1972. It further cites an order dated June 2, 2011, passed by the High Court of Punjab & Haryana, wherein a Division Bench observed that in “grave violation” of the Act, the companies including DLF had over 3,000 acres of land in their possession when an individual could have had up to 7.25 hectares of land.
According to the application, DLF had rights to 90 per cent of its Haryana land bank held through 281 shell companies, which was fraudulently disclosed as its own during the IPO in 2007. Thus, the application says, the profits earned by DLF on its land bank fraudulently disclosed should be considered for determining the penalty, and SEBI must be asked to consider the same on its merits.
SEBI and DLF did not reply to an email query from BusinessLine .