Supreme Court Denies SIT Probe in Adani-Hindenburg Case, Instructs SEBI to Conclude Investigation in 3 Months

Supreme Court:

Adani-Hindenburg case Supreme Court’s decision: The Supreme Court of India has asked SEBI to complete the investigation of the remaining two out of 22 cases related to the case within three months.

Adani-Hindenburg case verdict: The Supreme Court on Wednesday rejected a plea to transfer from the Securities and Exchange Board of India (SEBI) the investigation into the allegations made in a report published by US-based short seller Hindenburg Group against Adani group companies. . An SIT said that the petitioners have not made out any valid basis for this.

A three-judge bench headed by Chief Justice of India DY Chandrachud said that SEBI has completed the investigation in 20 of the 22 cases in connection with the allegations leveled against the Adani Group, and directed that the other two pending cases The investigation should be completed. Quickly, preferably within three months.

The bench, also comprising Justices JB Pardiwala and Manoj Mishra, also asked the Center and its investigating agencies to probe “whether the losses suffered by Indian investors due to short positions taken by Hindenburg Research and other entities are “Whether any violation is involved or not.” law and if so, appropriate action will be taken”.

The Supreme Court rejected allegations of conflict of interest raised by petitioners against some members of its expert committee and said the allegations were “baseless”.

The court said that the facts of the case do not warrant transfer of the investigation from SEBI. The judgment said that although it has the power to transfer the investigation in an appropriate case, such power is exercised in an exceptional case when the competent authority shows clear, deliberate and deliberate inaction in conducting the investigation. “The bar for transfer of investigation in the case has not been shown to exist”, the court said.

It rejected the petitioners’ reliance on the report of the Organized Crime and Corruption Reporting Project (OCCPR), saying that SEBI had been negligent in conducting the investigation and that “a report without any effort to verify the authenticity The third-party organization’s report “cannot be considered as conclusive evidence of its allegations.”

After the Hindenburg report in January last year accused the Adani Group of a “brazen stock manipulation and accounting fraud scheme spanning decades”, the OCCRP in September made fresh allegations of stock manipulation against the group. The OCCRP report said, “In at least two cases… [public] investors are believed to have extensive ties to the group’s majority shareholder, the Adani family”, and that Adani companies’ share prices Helped to manipulate.

The judgment said that “the power of this court to enter into the regulatory domain of SEBI in making delegated legislation is limited. The Court should refrain from applying its wisdom on the regulatory policies of SEBI. The scope of judicial review when examining a policy made by a particular regulator is to examine whether it violates fundamental rights, any provision of the Constitution, any statutory provision or is manifestly arbitrary.

The judgment said that “no valid grounds have been raised to direct SEBI to cancel its amendments to the FPI (Foreign Portfolio Investment) and LODR (List of Obligations and Disclosure Requirements) rules, which are within its delegated legislative power.” Were done in the experiment. The process followed to arrive at the present form of the Regulations does not suffer from irregularity or illegality. FPI and LODR rules have been tightened by the said amendments.

In July last year, Sebi had tightened disclosure norms for listed companies on agreements made by shareholders, promoters, related parties, directors, key managerial personnel and employees of the listed entity or its subsidiary, who are involved in the management of such companies. and may affect control. Firms for stock exchanges. They will have to disclose such agreements within 12 hours if a listed entity is a party and within 24 hours where the listed entity is not a party.

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