During the hearings, 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)“.
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On Wednesday today, the Supreme Court declined to mandate a Special Investigation Team (SIT) inquiry into the accusations made in the Hindenburg Research report concerning stock price manipulation by the Adani group of companies.
The Supreme Court of India, led by Chief Justice of India DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, has today morning, 3rd January 2024 delivered a significant verdict in the case involving allegations against the Adani group of companies, as reported by Hindenburg Research. The bench, after reserving judgment last November, has declined to order a Special Investigation Team (SIT) probe into the allegations of stock price manipulations by the Adani group.
During the hearings, 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 also expressed reluctance to accept arguments questioning the impartiality of the members of the expert committee constituted by the court to examine the issue. In the final verdict, CJI Chandrachud stated that there was no ground to transfer the probe from SEBI.
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The bench rejected the petitioners’ arguments regarding a conflict of interest among the members of the Expert Committee. However, it was emphasized that the Government of India and SEBI should consider the committee’s recommendations to strengthen the interests of Indian investors.
This case gained prominence following a report published by US-based short-selling firm Hindenburg Research on January 24, 2023. The report accused the Adani Group of widespread manipulations and malpractices aimed at inflating its stock prices. The Adani Group responded with a detailed 413-page reply, vehemently refuting the allegations.
Subsequent to the report, several Public Interest Litigations (PILs) were filed in the Supreme Court by advocates and activists, including Vishal Tiwari, ML Sharma, Congress leader Dr. Jaya Thakur, and activist Anamika Jaiswal. These PILs sought a court-monitored probe into the matter. On March 2, the Supreme Court constituted a committee to investigate any regulatory failures, directing SEBI to probe the allegations against the Adani group. The committee comprised notable figures such as Mr. OP Bhat, retired Justice JP Devadhar, Mr. KV Kamath, Mr. Nandan Nilekani, and Mr. Somasekharan Sundaresan, with former Supreme Court judge Justice AM Sapre as the head.
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Originally, SEBI was given two months to complete its probe, a deadline ending on May 2. However, in May, SEBI requested a six-month extension, citing the complexity of the transactions involved. The Supreme Court initially refused to grant the full extension but extended the deadline to August 14, 2023. As this deadline approached, SEBI sought an additional 15 days, informing the court of substantial progress in the investigation. SEBI’s interim report was based on available materials, and the regulator was awaiting further information from foreign agencies and regulators for a comprehensive evaluation.
This ruling by the Supreme Court underscores the judiciary’s confidence in SEBI’s ongoing investigation and the importance of regulatory bodies in maintaining the integrity of financial markets. The decision also highlights the court’s approach to balancing the need for thorough investigation with the principles of fairness and impartiality in high-profile corporate cases.