New Delhi: Market regulator SEBI Wednesday got three more months from the Supreme Court to complete its probe into the allegations made in the Hindenburg Research’s report against the Adani group of companies about manipulation of stock price.
Turning down its request of six-month extension, a bench led by Chief Justice D.Y. Chandrachud said: “We had originally (as per 2 March order) given you two months and now we are giving you three more months. So effectively you have got five months.”
The bench, however, gave liberty to the SEBI to approach the court in case it faces any difficulties in completing its probe.
The court’s order came on the SEBI’s application seeking another six months to complete its investigation.
In another direction, the bench also asked the expert committee led by retired SC judge, Justice A.M. Sapre, to continue with its deliberations and assist the court when its report is taken up to reflect on the suggestions made by the experts. The court is expected to hear the matter on this aspect in July when it reopens after the summer recess.
The six-member expert panel was mandated to investigate if there was a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies.
As per the direction, the expert committee submitted its report in a sealed cover. However, the court Wednesday said the report should be made available to parties and counsel to enable them to assist the court in further deliberations on the panel’s findings. It also “requested the committee to take up any further aspects of its suggestions”.
As it extended the deadline, the bench refused to direct the SEBI to give a status report to the court on its probe on the Global Depository Receipts (GDR) issue.
This refusal was in response to advocate Prashant Bhushan’s contention that the SEBI had probed the Adani Group in 2016 as well, when it undertook an inquiry against 51 companies for violation of GDR. Bhushan based his assertion on a government response made in Parliament to a question on the GDR and the Adani Group.
Solicitor General Tushar Mehta, appearing for the SEBI, rejected Bhushan’s claim. “The remit of this case is the Hindenburg report. The investigation of 2016 was on a totally different issue, having no nexus with the allegation in the Hindenburg report. No company of this group was part of that investigation,” he said, reiterating the stand the SEBI took in an affidavit filed Monday in the top court. As per the SEBI, the Hindenburg report is on the breach of minimum public shareholding norms.
The bench agreed with Mehta and told Bhushan that it cannot order a “roving enquiry against any company”. It then asked the solicitor to place on record an updated status report of its probe by 14 August.
In a fresh affidavit filed before the top court, the SEBI denied that it investigated the Adani group during its probe on GDR violations in 2016.
Regarding the finance minister’s response in Parliament in July 2021 where an investigation against the Adani Group was confirmed, the SEBI said it was not in the context of GDR but with regard to “possible non-compliance with Minimum Public Shareholding (MPS) norms, and consequential violations”.
Non-compliance of MPS is one of the allegations made in the Hindenburg report, which the SEBI is now examining, the regulator told the bench. In this connection, the regulator has already approached 11 overseas regulators under the Multilateral Memorandum of Understanding (MMOU) with International Organisation of Securities Commissions (IOSC). The first request was made as “early as on 6 October, 2020,” it added.
(Edited by Tony Rai)
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