Adani-Hindenburg Case: Supreme Court Gives Clean Chit To Adani Group, Dismisses All Allegations

The Supreme Court reposed confidence in SEBI's powers and ruled that petitioners could not provide enough material to transfer the Adani-Hindenburg probe to a special investigation team.

The top court disposed of the petitions, finding that the "threshold for a transfer of investigation" has not been made out.

Grounds for transferring the investigation are deemed to be valid only in cases of deliberate rule violations, the court said.

The petitioners' reliance on DRI's letter pertaining to the 2014 allegation concerning over-valuation of coal imports "is inconclusive", Chief Justice of India DY Chandrachud said, while reading the judgment.

The court has further clarified that the Securities and Exchange Board of India's use of the term 'opaque structures', in relation to FPI regulations, was misinterpreted by the expert committee. FPI regulations didn't prohibit opaque structures, and beneficial owners could be identified, the court said.

"No valid reasons presented to force SEBI to withdraw amendments on FPI and LODR regulations. The regulations are considered sound, without any flaws," the court held.

Allegations of conflict of interest against members of Supreme Court-appointed expert committee are not sustainable, it said.

Noting that SEBI has completed investigation in 22 of 24 allegations, the top court asked the markets regulator to conclude the probe in the remaining two matters in three months.

However, the court has clarified that SEBI should take into account the expert committee recommendations, to strengthen investor interests.

The Story So Far

After Hindenburg Research's report and Adani Group's counter in January, four public interest petitions were filed before the apex court. The PILs had broadly asked for directions regarding allegations against the Adani Group.

On March 2, the Supreme Court directed SEBI to look into any disclosure breaches and possible price manipulation of Adani stock in violation of existing laws.

The regulator was directed to submit its report within two months. But in April, SEBI made submissions before the apex court asking for six months to conclude its investigation. The court, however, granted time only till Aug. 14.

Since the markets regulator required more time to complete the investigation, it filed an application before the court on Aug. 14 asking for 15 additional days. As per SEBI's last status report, which was submitted to the court on Aug. 25, the regulator had wrapped up its investigation in 22 of the 24 matters.

The Supreme Court had also set up an independent committee back in March. This committee was headed by Justice (retired) Abhay Manohar Sapre. Other members of the committee included OP Bhat, KV Kamath, Nandan Nilekani, Somashekhar Sundaresan, and retired Justice JP Devadhar.

The committee submitted its report before the top court in May, concluding that a regulatory failure by SEBI could not be ascertained.

During the last hearing in November, the top court had expressed confidence in the regulator and dismissed allegations doubting SEBI's role in the investigation.

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