New Delhi: The Supreme Court Wednesday ruled that there were no grounds to order a Special Investigation Team (SIT) or CBI probe into the Adani-Hindenburg matter, refusing to interfere with the jurisdiction of the Securities and Exchange Board of India (SEBI) in probing the case.
The bench comprising Chief Justice of India D.Y. Chandrachud, Justices J.B. Pardiwala and Manoj Misra observed that there was no room to doubt the fairness of SEBI’s probe, which it said was complete in 22 of 24 cases of alleged violation of SEBI rules and regulations by Adani Group companies. It directed SEBI to complete its probe into the remaining two cases in three months.
The court left it to the government and SEBI to look into whether there was any infraction of law in the matter, and if so, to take action in accordance with the law.
Soon after the ruling, Adani Group chairperson Gautam Adani posted on social media platform X that “truth has prevailed”.
The Hon'ble Supreme Court's judgement shows that:
Truth has prevailed.
Satyameva Jayate.
I am grateful to those who stood by us.
Our humble contribution to India's growth story will continue.
Jai Hind.
— Gautam Adani (@gautam_adani) January 3, 2024
The controversy relates to a report released in January last year by New York-based Hindenburg Research. The report, titled ‘Adani Group – How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History’, accused the Adani Group of “brazen stock manipulation and accounting fraud scheme over the course of decades”. After the publication of the report, the Adani group’s seven listed companies lost $110 billion in cumulative stock market value.
Several petitions were then filed in the Supreme Court, demanding a court-monitored probe into the allegations made in the report.
The SC Wednesday also refused to rely on the investigation conducted by the Organized Crime and Corruption Reporting Project (OCCRP), as reported in the Financial Times and The Guardian in August last year.
Moreover, it rejected the petitioners’ argument of conflict of interest on the part of the expert committee set up under the supervision of former Supreme Court judge A.M. Sapre in March last year. The committee members nominated by the court were former SBI chairman O.P. Bhat, retired justice J.P. Devadhar, veteran banker K.V. Kamath, co-founder of Infosys Nandan Nilekani and Bombay-based advocate Somasekharan Sundaresan. In its report released in May, the panel prima facie found no lapse on the part of markets regulator SEBI in the matter.
The court said that the Government of India and SEBI shall take into consideration the recommendations of the committee to strengthen interest of Indian investors.
The court had constituted this panel to review the market regulatory mechanism in light of the Adani-Hindenburg controversy. It had also directed SEBI to complete its probe into the allegations made in the Hindenburg Research report within two months. However, in May, SEBI filed an application in the apex court requesting a six-month extension to complete its probe.
During the hearing in November last year, the bench had taken exception to conflict of interest allegations against members of the expert committee. It also disapproved of one of the petitioners’ contentions with market regulator SEBI’s conduct in probing allegations of fraud made against the business conglomerate.
CJI Chandrachud had then asserted that SEBI cannot be expected to follow what newspapers have reported on Adani’s alleged conduct. The CJI had also said that “the court could not proceed on the assumption that the report was true, as it was a matter for investigation”.
“We don’t have to accept the Hindenburg report as ipso facto factually correct. That is why we asked SEBI to investigate,” the CJI said, while reserving verdict on the petitions.
(Edited by Gitanjali Das)
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