Housewives’ fraud leads to DLF jugglery

New Delhi: It was an individual complainant, seeking action against Rs 34 crore he was allegedly duped, and “sham transactions” involving three ‘housewives’ that has led to regulator Sebi coming hard on the country’s biggest real estate developer DLF and its top executives. The case, in which Sebi has imposed a three-year ban, relates to non-disclosure of these transactions and the related risks when DLF raised Rs 9,187.5 crore through an IPO, the largest in the country at that time. The company has denied having violated any laws and has said it would defend itself against all adverse findings in the order.

With regard to this IPO, one Delhi-based businessman Kimsuk Krishna Sinha filed two complaints with Sebi on June 4, 2007 and July 19, 2007, Sebi said in its 43-page order. In his first complaint, Mr Sinha stated that Sudipti Estates Private Limited and certain other persons had duped him of Rs34 crore in relation to a transaction between them for purchase of land, and he had also registered an FIR against Sudipti, one Praveen Kumar and others in that regard.

He also stated that Sudipti had only two shareholders, namely, DHDL and DEDL, both the wholly-owned subsidiaries of DLF.Mr Sinha further alleged that Sudipti, DHDL and DEDL were sister concerns and are inextricably linked and these companies are a part of the DLF group. In his second complaint, Mr Sinha said that DLF was denying its or its subsidiaries’ connection with Sudipti at that point of time. He, however, claimed that DLF’s claim of not having any association with Sudipti was false.

When asked by Sebi, DLF denied the allegations. Not being satisfied with the response provided by DLF, Mr Sinha filed a Writ Petition before Delhi High Court, which asked Sebi to probe the matter in April 2010. After the probe, Sebi issued show cause notices in June 2013 to DLF, chairman and main promoter K.P. Singh, his son Rajiv Singh, daughter Pia Singh, as also three others including MD T.C. Goyal, then CFO Ramesh Sanka, then executive director (Legal) Kameshwar Swarup and then non-executive director G.S. Talwar.

On November 29, 2006, the entire shareholding in Felicite was sold to three persons namely, Madhulika Basak, Niti Saxena and Padmaja Sanka. wives of Surojit Basak, Joy Saxena and Ramesh Sanka, respectively who were the KMPs of DLF.

“These three shareholders were not regular investors/ traders in the securities market. All the three transferees were ‘Housewives’ and they held bank accounts jointly with their respective husbands,” Sebi said. On this basis, it was alleged that their purchases of shares in Felicite were funded by their respective husbands’.