Adani-Hindenburg row: SC refuses SIT probe, says no irregularities found

New Delhi: The Supreme Court refused to order an SIT probe into the allegations levelled into the Hindenburg Research report regarding stock price manipulations by the Adani group of companies.

A three-judge bench comprising Chief Justice of India DY Chandrachud, Justices JB Pardiwala and Manoj Misra had reserved the judgment on November 24 last year on the PILs, which sought a court-monitored probe into the allegations levelled in the Hindenburg Research report regarding stock price manipulations by the Adani group of companies.

During the hearing of the matter, the Bench had orally remarked that there was no material to doubt the investigation carried out by the Securities and Exchange Board of India ("SEBI"). The Bench had also expressed reluctance to accept the arguments against the impartiality of the members of the expert committee constituted by the court to examine the issue.

Today, while pronouncing the verdict, CJI Chandrachud said that there was no ground to transfer the probe in the case from SEBI.

The Bench rejected the arguments of petitioners regarding conflict of interest on the part of the members of the Expert Committee. However, it was added that the Govt of India and SEBI shall take into consideration the recommendations of the committee to strengthen the interest of the Indian investors. The judgement on the PILs, filed by lawyers Vishal Tiwari, M L Sharma and Congress leaders Jaya Thakur, and Anamika Jaiswal, was reserved on November 24 last year.

The pleas claimed the allegations that the Adani Group, considered close to the Modi government, inflated its share prices and, after the report of the short seller Hindenburg Research, the share value of various group entities fell sharply.

It While reserving the verdict, the bench had said it had no reason to "discredit" SEBI, which probed allegations against the Adani group, as there was no material before it to doubt what the market regulator had done. It said the court does not have to treat what was set out in the Hindenburg report as a "true state of affairs".

It had asked the Securities and Exchange Board of India (SEBI) as to what it intends to do in the future to ensure investors don't lose wealth due to volatility in the stock market or short-selling.

"We don't have to treat what is set out in the Hindenburg report as ipso facto (automatically) a true state of affairs. That is why we directed the SEBI to investigate. Because for us to accept something which is in the report of an entity, which is not before us and whose veracity we have no means of testing, would be unfair," the bench had said.

Senior lawyer Prashant Bhushan had argued that SEBI's role in the matter was "suspect" for several reasons because a lot of information was available to the regulator way back in 2014.

Solicitor General Tushar Mehta, appearing for the SEBI, had told the bench that there was "a growing tendency of planting stories outside India to influence things and policies inside India".

Mehta had said that the investigation in 22 out of the 24 cases relating to allegations against the Adani group was over.

One of the PILs had alleged that changes to the Securities and Exchange Board of India Act (SEBI Act) provided a 'shield and an excuse' for the Adani Group's regulatory contraventions and market manipulations to remain undetected.

The top court had then asked the SEBI to independently investigate the matter and constituted a committee of experts headed by former SC judge Justice AM Sapre.

The Adani Group stocks got bludgeoned on the bourses after Hindenburg Research made a litany of allegations, including those about fraudulent transactions and share-price manipulation, against the business conglomerate.

The Adani Group dismissed the charges as lies, saying it complies with all laws and disclosure requirements.
(With inputs from Livelaw and PTI)