The Supreme Court's decision on Wednesday brought significant relief to the Adani group as it refused to move the investigation of the Adani-Hindenburg issue to a Special Investigation Team (SIT) or CBI. The issue involves allegations of stock price manipulation by the Indian corporate giant, and the probe will not be transferred from the Securities and Exchange Board of India (SEBI).
A panel consisting of Chief Justice of India DY Chandrachud, PS Pardiwala, and Manoj Misra stated that the Supreme Court's authority to intervene in the regulatory realm of SEBI is restricted.
The court stated that judicial review is limited to determining if any fundamental rights have been infringed. It also mentioned that the circumstances of the case do not justify transferring the investigation to another agency. Additionally, the court expressed confidence in the investigation conducted by the SEBI, stating that there is no reason to question its validity.
The apex court's decision was delivered on a set of requests for a court-supervised inquiry or a CBI investigation into the accusations made by US-based company Hindenburg Research against the Adani group of companies regarding stock market violations.
The court stated that SEBI has not failed in its regulatory duties and cannot be relied upon to perform its functions solely based on media reports, although such reports can provide information to SEBI.
The top court asked SEBI to complete within three months its probe into two cases pending out of 24 cases.
The issue pertains to claims made in a report by short-seller Hindenberg Research, alleging that Adani had artificially boosted its stock prices. Following the publication of these allegations, the share value of several Adani companies reportedly plummeted by approximately USD 100 billion.
The Adani Group has denied the accusations as falsehoods, asserting that it adheres to all legal regulations and transparency obligations.
Several legal complaints were submitted claiming that amendments to the Securities and Exchange Board of India Act (SEBI) had created a protection and justification for the Adani Group's violations of regulations and manipulations in the market to go unnoticed.
The highest court then requested SEBI to conduct a separate investigation into the issue and also formed a panel of experts led by retired Supreme Court judge Justice AM Sapre to examine the matter.
In its report last May, the expert committee found no initial evidence of fault on the part of the SEBI in the matter.
The Supreme Court, in withholding its decision, stated that it had no grounds to question the investigation conducted by SEBI into the allegations against the Adani group. The court emphasized that there was insufficient evidence to cast doubt on the actions of the market regulator.
Furthermore, the court clarified that it is not obligated to accept the information presented in the Hindenburg report as an accurate representation of the situation.
It had observed that it cannot ask a statutory regulator to take as a "gospel truth" something which was published in the media.
Prashant Bhushan, representing a petitioner, informed the highest court that the Hindenburg report contained numerous significant disclosures.
He stated that the ultimate decision on the credibility of the SEBI's investigation and the need for an independent organization or a Special Investigation Team (SIT) to conduct the inquiry lies with the highest court.
