US-based short seller Viceroy Research disagrees with Ex-CJI Chandrachud’s legal opinion supporting Vedanta. Viceroy says his opinion failed to address financial misconduct and misrepresentation.
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NEW DELHI: US-based short seller Viceroy Research has strongly disagreed with former Chief Justice of India, D.Y. Chandrachud, over his legal opinion on Viceroy’s serious allegations against Vedanta Group.
Viceroy had earlier accused the mining and metals giant Vedanta of major financial fraud and misrepresentation.
Viceroy said that ex-CJI Chandrachud’s legal opinion, released on July 19, ignored or avoided serious concerns like questionable dividend payments and financial mismanagement.
According to Viceroy, these issues were raised clearly in its first report released on July 9, targeting Vedanta’s billionaire promoter Anil Agarwal and his group.
Viceroy strongly claimed that Chandrachud’s legal comments:
“Fail to refute, investigate, verify, or even engage with a single substantive financial allegation or even mention the short-seller said in a report on Vedanta in 13 days.”
The firm added that Justice Chandrachud’s legal opinion had no answer to these serious issues and was “allegations baseless.”
Chandrachud had said in his legal note to Vedanta that Viceroy’s report lacked credibility and had “dubious credentials.”
He also said,
“There is no information on how this opinion was arrived at,” especially as “Viceroy’s website had no information in this regard.”
He also pointed out that Viceroy seemed to be taking advantage of a fall in Vedanta’s share prices after publishing damaging reports.
“When faced with serious allegations backed by detailed financial evidence, the company responded not with transparency, but with a character assassination attempt dressed in legal language,”
-the short seller wrote.
Viceroy had taken a short position in Vedanta’s UK-listed bonds before publishing the report and had revealed that Vedanta Ltd, a subsidiary, had to take on large debt to defend itself legally.
“Vedanta has consistently denied Viceroy’s allegations, terming the accusations baseless.”
Justice Chandrachud’s legal opinion mainly focused on “management questions without contesting it,” Viceroy said.
It also said,
“The short-seller failed to dispute any of its findings, conclusions, or concerns.”
The ex-CJI responded to this by saying that his legal role was limited and professional. He clarified that his opinion was only based on law and protected by “professional privilege.”
He explained,
“It is inappropriate to discuss the opinion pertaining to it in public realm.”
Justice Chandrachud also criticized Viceroy’s report saying it contained dangerous and unsupported words like “ponzi scheme” and “parasite”, which he believed were aimed at harming Vedanta Ltd’s business reputation.
He also said,
“Vedanta was well placed to seek legal remedies.”
He stated that Viceroy’s report had a lot of opinions and accusations but lacked proper evidence.
“More disclosure did not confirm legality of the transactions,”
-Chandrachud said, meaning the information given by Viceroy still could not prove wrongdoing.
In April, Viceroy published their first report on Vedanta Resources Ltd and its connection to misuse of subsidiary funds and ownership structure through Hindustan Zinc Ltd. Vedanta Resources is the parent company of Vedanta Ltd and has a majority stake in Hindustan Zinc.
Former trial court judge Rishabh Gandhi also supported Justice Chandrachud’s legal note and said the ex-CJI simply provided a
“Legal opinion—an independent legal expert based on presented issues and available documents.”
Gandhi is founder of Rishabh Gandhi & Associates.
He further explained,
“An independent legal opinion was based on detailed documents, statutory interpretation, and precedent, primarily to confirm legal compliance and foreseeability of corporate actions such as dividend decisions, inter-company transactions, or board resolutions.”
When Mint asked Vedanta about Viceroy’s rebuttal, Vedanta did not respond immediately.
Justice Chandrachud’s legal view stated that financial statements and required filings by Vedanta showed proper transparency and were in line with law.
“Such disclosures should be assumed legitimate unless there was clear evidence to prove otherwise,” he opined.
Ex-CJI Chandrachud Slams Viceroy Report on Vedanta: “Questionable, Lacks Credibility And Harmful”
Former Chief Justice of India (CJI) D.Y. Chandrachud has said that the report written by U.S.-based short seller Viceroy Research about the Vedanta Group “lacks credibility“.
He shared his legal opinion after Vedanta asked him to give an independent view on the serious claims made in the report.
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The former CJI has also said that Vedanta has a strong legal ground to take action against the firm.
In a regulatory filing, Vedanta said it asked Justice Chandrachud for a legal opinion about the report published by Viceroy Research. The ex-CJI looked into the claims and the background of the people behind the report and raised doubts about their reliability.
He said the people behind the report do not seem trustworthy, and that this raises “preliminary concerns about the credibility of the report.”
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He also clearly stated-
“Viceroy has a track record of taking short positions in listed companies and then publishing misleading reports to profit unlawfully from the resulting market impact.”
He added that there are many past examples where Viceroy Research was fined or penalized for making false and misleading reports and for trying to change share prices artificially.
Justice Chandrachud strongly criticized the language used in the report. He said the Viceroy report made very serious accusations and harmed Vedanta’s name and its business.
He explained that the report used words like “ponzi scheme” and “parasite”, which damaged Vedanta’s image.
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He stated,
“The report contains serious imputations such as ‘ponzi scheme’ and ‘parasite’, which have caused harm to querist’s (Vedanta’s) business and reputation,” and also said, “In these circumstances, the querist would be well-placed to seek legal remedies.”
Viceroy Research had targeted Vedanta Resources Ltd (VRL), which is the UK-based parent company of Indian-listed Vedanta Ltd. The report made harsh claims against VRL, calling it
“A house of cards built on a foundation of unsustainable debt, looted assets, and accounting fiction.”
It also said that the group was draining its Indian unit (VEDL), increasing its debts, using up cash reserves, and making it hard for lenders to recover their money.
The report even compared the situation to a “Ponzi scheme”.
Before Vedanta, Viceroy had already gone after 29 other international companies using similar methods.
In its response, Vedanta had said the report was “a malicious combination of selective misinformation and baseless allegations” and that the authors did not even try to contact the company before publishing it.
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