A bench of justices S Ravindra Bhat and S P Garg reserved the judgement after counsel appearing for the parties concluded their arguments.
The counsel for Sinha said that SEBI had directed an investigation on the basis of submissions made by DLF.
He said that SEBI's order came after DLF failed to submit documents in support of its claim that Sudipti Estates was not its associate firm.
Senior advocate Parag Tripathi appearing for SEBI, said that there was no violation of the division bench order as it has passed order to investigate into the allegations to come to the conclusion to form a prima facie opinion.
"Forming a prima facie opinion that whether there was a violation of SEBI's regulation is an administrative act ...," Tripathi said.
The single judge-bench, in its order, had said that SEBI's powers should not be restricted as they have been created to look into the issues pertaining to stock exchanges.
SEBI had earlier ordered a probe into the issue of IPOs after the division bench of Delhi High Court had asked it to look into the complaint of Sinha against DLF Group and Sudipti Estates and pass an order in three months.
In the FIR lodged against Sudipti in Delhi, Sinha had alleged the company and its directors/agents had "lured and compelled" him to transfer certain plots of land and did not fulfil the promise of developing the land and providing him higher returns.
Sinha had alleged Sudipti, DLF Home Developers Limited and DLF Estate Developers Limited were sister concerns inextricably linked and were part of the DLF Group.
DLF has, however, maintained Sudipti is a separate legal entity owned and controlled by different individuals.
DLF in a Draft Red Herring Prospectus (DRHP), filed for a public issue in May 2006, said that Sudipti was its associate.
The DRHP, however, had been withdrawn and thereafter, it filed a fresh prospectus in January, 2007, wherein Sudipti was not mentioned as an associate.