Adani-Hindenburg Case: SC Says No Ground To Transfer SEBI Probe, Asks Market Regulator To Complete Investigation In Three Months

On Wednesday, the Supreme Court backed the ongoing investigation by market regulator SEBI into accusations against the Adani Group of companies raised in a report by US-based short seller Hindenburg.

The Court stated that its authority to interfere in SEBI's regulatory domain is "limited".

"SEBI must carry out the investigation to its logical end,” the court said, adding that “no ground was made out for transfer of probe from the regulatory board”.

“SEBI has completed investigation in 20 out of 22 matters. Taking into account the assurance of Solicitor General, we direct SEBI to complete the investigation in the other two cases preferably within three months,” the court said.

“Allegations of conflict of interest of expert committee members is unsubstantiated and rejected,” the Supreme Court added.

In March last year, the Supreme Court had set up a six-member committee to examine any potential regulatory shortcomings in handling the alleged breaches of securities market laws in relation to the Adani Group or other firms.

The court had also directed the SEBI to investigate if there was a breach of the minimum public shareholding standards in public limited companies, non-disclosure of dealings with associated parties, and any possible manipulation of stock prices.

On 24 November 2023, the three-judge bench of Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra reserved its decision on the petitions, objecting to accusations of conflict of interest against members of the committee it had constituted.

“We don’t have to treat what is set out in the Hindenberg report as ipso facto a true state of affairs. That is why we directed SEBI to investigate. Because for us to then accept something which is in a report of an entity, which is not before us, and whose veracity we have no means of testing, would really be unfair. So therefore, we asked SEBI ‘you go and exercise your powers and test what has not come to light, you treat these as revelations or disclosure of allegations and you now exercise your jurisdiction as an adjudicating body’,” the CJI had said.