Apex Court Backs SEBI’s Adani Investigation, Rejects Parallel Probe Calls

The Supreme Court today dismissed pleas seeking an SIT probe into allegations of stock manipulation against the Adani Group made in a report by Hindenburg Research.

A three-judge bench headed by Chief Justice of India DY Chandrachud ruled there were no grounds to doubt the ongoing investigation being conducted by the Securities and Exchange Board of India (SEBI).

“There is no valid basis made out to direct SEBI to revoke its amendments to FPI and LODR regulations. These regulations have only been tightened by the amendments in question,” the CJI stated.

The apex court noted SEBI had already completed probes in 22 out of 24 cases related to the matter. On the assurance of the Solicitor General, the court directed SEBI to finish probes in the remaining two cases within three months.

The bench, also including Justices JB Pardiwala and Manoj Misra, declined pleas to rely on news reports and a report by the Organized Crime and Corruption Reporting Project to cast doubts on SEBI’s investigation.

“Reliance on unsubstantiated news reports and third-party organisations cannot be accepted to doubt a statutory regulator’s probe,” the court observed.

Arguments from petitioners regarding conflict of interest among members of the expert panel appointed by the court were also rejected.

The court, however, said the government and SEBI should consider the panel’s recommendations to bolster the regulatory framework in order to safeguard retail investors.

SEBI was also directed to probe whether losses suffered by investors from the Hindenburg report and short-selling by other entities involved any legal violations, and take suitable action if needed.

The court concluded with a caution against public interest litigations filed without diligent research and based on unverified media reports.

The bench had earlier reserved its verdict on November 24, 2022 on PILs seeking a court-monitored investigation into Hindenburg’s claims of stock manipulation by the Adani Group. During hearings, the court had orally observed there were no grounds to doubt SEBI’s probe. It had also expressed reservations about arguments challenging the expert panel’s impartiality.