Delhi — Shares of DLF today ended nearly 9% lower after the Punjab and Haryana High Court set aside the state government’s decision to allot 350 acres of land in Gurgaon to the realty major in 2010. After falling 11.66% to Rs 167.30 in intra-day trade, shares of DLF finally ended at Rs 167.30, down 8.60% on the BSE. At the NSE, the stock plunged 8.15% to settle at Rs 168. Led by sharp fall in the stock, the company’s market value tumbled by Rs 2,803 crore to Rs 29,809 crore. In terms of volume, 28.73 lakh shares of the company changed hands at the BSE, while more than 2 crore shares were traded at the NSE during the day.
The order was passed by a division bench of the court, comprising Justice Surya Kant and Justice Amol Rattan Singh, which directed Haryana government to conduct an auction of the land in question by inviting international bids within a month. The court, however, allowed DLF to participate in the auction process. The court passed the verdict while disposing a bunch of petitions filed by farmers challenging the acquisition and transfer of the land to DLF, citing that the land awarded to DLF was a village common land. The counsel of the petitioner said that the bench upheld the acquisition of the land by state-owned authorities but it cancelled the land transfer to DLF, which had proposed to come up with golf villas at the site.
In 2012, DLF was restrained by the court from carrying out any construction and also from creating any third party rights. DLF had bagged a 350-acre plot for Rs 1,750 crore for developing a recreation and leisure project.
The letter of acceptance was issued to DLF after the real estate firm was found the successful bidder by Haryana State Industrial and Infrastructure Development Corporation Ltd.
“The Company is awaiting a copy of the order and can offer detailed comments only pursuant to that,” DLF said in a statement. DLF says the land was for a project that was yet to be developed.
The court ruling raises concerns about increased regulatory scrutiny on the company. But JP Morgan says impact from actual land cancellation is “cash positive.” It estimates overall cost for purchased land was 25 billion rupees ($413.56 mln) of which DLF has already paid 10 billion rupees. DLF would thus get a 10-billion refund in case of eventual cancellation, JP Morgan says.