The Supreme Court on January 3 refused to transfer the investigation being carried out by market regulator SEBI into Hindenburg Research’s allegations against the Adani Group to a separate Special Investigation Team (SIT) saying that the power of the court to enter the regulatory domain of SEBI is “limited”.
“SEBI has completed investigation in 20 out of 22 matters. Taking into account the assurance of the Solicitor General, we direct SEBI to complete the investigation in the other two cases preferably within three months”, a bench headed by Chief Justice of India (CJI) D.Y. Chandrachud ordered.
The SEBI was also ordered to probe if the Hindenburg report on short-selling amounted to a violation of law, causing harm to investors.
Watch | What is the Adani-Hindenburg saga all about?The bench also underscored that the report of the Organised Crime and Corruption Reporting Project (OCCPR) cannot be relied upon to doubt the SEBI investigation. It said that a report by a “third party organisation” cannot be regarded as “conclusive proof”.
The allegations of conflict of interest leveled against the members of the court-appointed expert committee were dismissed for being “unsubstantiated”. Further, the Union government and SEBI were ordered to take into consideration the recommendations of the committee to strengthen the interest of the Indian investors.
The Hindenburg research report alleged that the Adani group was “engaged in a brazen stock manipulation and accounting fraud” and that key listed companies in the group had “substantial debt” which put the entire group on a “precarious financial footing”. A sharp fall in the share value of various Adani companies, reportedly to the tune of $100 billion, was seen after the report was published.
This led to a batch of petitions being filed before the top court including a plea that alleged that changes to the Securities and Exchange Board of India Act (SEBI Act) had provided a ‘shield and an excuse’ for the Adani Group’s regulatory contraventions and market manipulations to remain undetected.
Thereafter, the apex court asked SEBI to independently investigate the matter, apart from constituting an expert committee headed by former Supreme Court judge Justice A.M. Sapre to also look into the matter.
Also Read: Explained | Decoding the expert committee report on Adani
The expert committee in its report released in May, found no prima facie lapse on the part of SEBI in the matter.
However, a plea filed by Anamika Jaiswal, through advocate Prashant Bhushan, sought the formation of a separate Special Investigation Team (SIT), saying that the earlier committee was hit by a “conflict of interest”.
Mr. Bhushan said one of the committee members, O.P. Bhatt, a former chairman of the State Bank of India, was working as the Chairman of Greenko, a leading renewable energy company. Since March 2022, Greenko and Adani Group were working in a close partnership to provide energy to Adani Groups’ facilities in India, he submitted.
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