SEBI Given Until 14 August To Complete Enquiry Against Adani Group; Address Issues 'Directly Related' To Hindenburg Report, Says SC

The Supreme Court has granted the Securities and Exchange Board of India (SEBI) time until 14 August to conclude its investigation into the Hindenburg-Adani Group allegations.

SEBI clarified that the investigation mentioned by Minister of State for Finance Pankaj Chaudhary in July 2021 pertains to a probe conducted in October 2020 regarding minimum public shareholding norms and related violations.

SEBI was responding to submissions made by petitioners in court that it had been investigating Adani since 2016.

“Minister of State for Finance, Pankaj Chaudhary, told the Lok Sabha on July 19, 2021 that SEBI had been investigating the Adani Group. Now SEBI tells the Supreme Court that they have not been investigating any of the serious allegations against Adani!,” Jairam Ramesh of the Congress party said in a tweet.

SEBI's Solicitor General clarified that the Minister was referring to an October 2020 investigation and no probe against Adani was initiated in 2016.

“The Minister, in his reply to the Parliament on July 19, 2021, confirmed that SEBI is investigating companies with regard to SEBI regulations. It may be noted that the ‘investigation’ referred to is with regard to non-compliance with 'minimum public shareholding' (MPS) norms and consequential violations.

"This investigation commenced in October 2020. It was this investigation, commenced in October 2020, which the Minister referred to in the Parliament. It is confirmed that the investigation referred to by the Minister had not commenced in 2016,” Mehta submitted, reports The Hindu.

SGI Mehta said, “one of the allegations made in the Hindenburg report was related to the non-compliance of minimum price shareholding norms and violations”. The SEBI was already investigating it.

The court mentioned that SEBI's updated status report should specifically address the issues that are "directly relevant" to the Hindenburg report.

“One of the aspects which will have a bearing on what is disclosed in the Hindenburg report is the non-compliance with MPS norms,” the Bench noted.

As per the Solicitor General, the 2016 "investigation" that is repeatedly mentioned pertains to SEBI's order related to the issuance of Global Depository Receipts (GDR) by 51 Indian listed companies.

“No listed entity of this company (Adani) was part of the 51 companies,” SG maintained.

“Though the SEBI had directed the freezing of Foreign Portfolio Investments (FPI), including that of Albula Investment Fund Limited, Cresta Fund Limited and APMS Investment Fund Limited as a consequence of its 2016 order, it is hereby clarified that this action is purely in consequence of the GDR matter and not related to any examination into ‘so and so’ company,” SG Mehta said.

“You can’t pick up something in 2016 and 2020 and connect it with the allegations from the Hindenburg report… The 2016 issue was totally different, distinct and completely separate,” he added.

Prashant Bhushan, appearing for one of the petitioners, responded: “But the question is what has happened to all these investigations… SEBI must put everything on record.”

Mehta said that the petitioners could not to go on a "roving enquiry" during the court proceedings.

“The purpose of these proceedings is not for us or for a PIL petitioner to conduct a roving enquiry… On whatever is directly related to the Hindenburg report, the Solicitor General said he is filing an affidavit… What is now related to the Hindenburg report is about compliance with MPS norms,” Chief Justice DY Chandrachud said during the hearing.

The court informed SEBI that it would not grant an "indefinite extension of time" but left room for the market regulator to provide an update by 14 August.

The court stated that it would assess the situation based on the information provided by SEBI.