Tribunal quashes Sebi ban on DLF in 2:1 majority verdict

In an unprecedented majority verdict, the Securities Appellate Tribunal on Friday quashed an order by the Securities and Exchange Board of India (SEBI) that banned the realty giant DLF Limited and its six top executives, including chairman KP Singh, from the capital market for three years. SAT Presiding Officer Justice JP Devadhar dissented from the other two Members of three-member SAT bench — Jog Singh and AS Lamba — and proposed a reduction in the period of ban from three years to six months.” [related-post] “Viewed from any angle, the impugned order is like a troubled sea whose waters only cast up mire and dust and, therefore, the same is liable to be quashed and set aside,” Jog Singh and Lamba said in their order, rejecting the Presiding Officer’s order. The Presiding Officer then proposed another direction for staying the majority order passed by the Tribunal for a period of four weeks “in view of the conflicting views in the matter”. This was after Poornima Advani, counsel for Sebi and BM Chatterjee, counsel for complainant made oral applications seeking stay of the operation of the order passed in the above appeals. However, after an argument, the two Members rejected this plea for a stay on the first majority decision. The two Members made scathing comments on the Sebi’s order, saying, “the jumbling up of rules, regulations and various provisions occurring and operating in different fields, by the respondents (Sebi), in the impugned order, has led to a grave miscarriage of justice in the present case ... as the investors have suffered a loss to the tune of000 of0000000 of rupees in the capital market on the day following the passing of the order making it a case of “over-regulation”. “This is certainly not the objective of conferring wide discretionary powers upon Sebi. It has to apply its mind to every set of facts dispassionately without being influenced by any whistle blower,” the order said. They also questioned the “somersault” done by Sebi after seven years of investigation and “come to a contrary view, particularly, at the instance of a complainant who had his own vested interest in the matter, and was not a shareholder of the appellant (DLF)or even an investor in the IPO or in the capital market in general.” Soon after the SAT pronounced its order, DLF shares soared by about 8% in a weak market and closed higher by 5.74% at Rs 157.50 on the BSE. Sebi had passed an order in October last year after finding them guilty of “active and deliberate suppression” of material information at the time of its IPO in 2007. “DLF and its board were guided by and acted on the advice of eminent legal advisors, merchant bankers and audit firms while formulating its offer documents in 2007. We have full faith in the judicial system and we always abide by its order,” DLF said in a statement .