The Supreme Court refused to hear a PIL seeking a probe into Viceroy Research’s fraud allegations against Vedanta, with Solicitor General warning of foreign short-sellers misusing Indian courts. The petitioner later withdrew the case after the Bench showed disinclination.
New Delhi: The Supreme Court of India on Friday refused to hear a public interest litigation (PIL) petition asking for an investigation into allegations made by US-based short-seller Viceroy Research LLC against Vedanta Limited, Hindustan Zinc Limited, Vedanta Resources Limited, and related companies.
A Bench of Justices PS Narasimha and AS Chandurkar said that it was not inclined to take up the case, after which the petitioner, Shakti Bhatia, decided to withdraw the PIL.
Senior Advocate Gopal Sankaranarayanan, appearing for the petitioner, explained that the request made in the case was narrow and limited.
He told the Court that the relief sought was only to make sure that the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) act on the complaints already sent to them and perform their legal duties of inquiry and investigation.
He added that this case was very different from the Adani–Hindenburg litigation where the Court was asked to
“presume guilt and to monitor an expert committee.”
Instead, in this case, the petitioner’s request was only that the regulators should look into serious complaints that were already submitted. Sankaranarayanan said,
“the petitioner’s case is simply that the regulators had been alerted to potential violations but had taken no visible action.”
He also pointed out that Viceroy had written detailed complaints to both SEBI and RBI, and that the petitioner had independently verified some of the issues raised by checking MCA21 records and public disclosures.
He clarified that the petitioner was not endorsing or agreeing with all of Viceroy’s conclusions.
He said,
“The petitioner was not endorsing Viceroy’s conclusions or accusing Vedanta of guilt but was only seeking that regulators discharge their statutory mandate in the face of serious allegations involving listed companies,”
On the other hand, Solicitor General Tushar Mehta, appearing for the Union government, argued strongly that this PIL was not genuine. He claimed that it looked like the case had been pushed by the foreign short-seller itself.
Mehta said that after the PIL was filed, it was actually Viceroy and not the petitioner who wrote to SEBI informing them about the case.
Mehta said,
“This showed that the petitioner was only a name lender for Viceroy,”
He then warned the Court about what he described as a repeating problem in India’s markets. He said there was a
“systematic pattern where outside agencies create reports and influence the Indian stock market.”
According to him, foreign short-sellers use this method: they publish damaging reports on big Indian companies and then create more pressure by linking it with litigation.
He told the Court that the country’s highest court should not be misused in this way. Mehta remarked that people sitting abroad
“cannot take the Supreme Court on a joyride.”
He concluded that if regulators like SEBI and RBI felt there was something serious, they could themselves investigate and issue reports, but the PIL in its current form should not be allowed.
After listening to both sides, the Supreme Court refused to entertain the petition, leading to its withdrawal.
Interestingly, before this hearing, two different Benches of the Supreme Court had already recused themselves from hearing the matter.
The case traces back to July 9, 2025, when Viceroy Research LLC released an 87-page report titled “Vedanta – Limited Resources”.
The report accused Vedanta Limited (VEDL), Hindustan Zinc Limited (HZL), Vedanta Resources Limited (VRL), and other affiliated companies of serious fraud, financial mismanagement, and regulatory breaches.
According to Viceroy, VRL was like a “parasite” holding company with no real operations, surviving only by pulling out money from its “dying host” VEDL. The report alleged:
- Fraudulent and unfair trade practices violating SEBI’s PFUTP Regulations, 2003.
- Misrepresentation of financial statements and diversion of funds through brand and management fee arrangements.
- Improper use of upstream dividends and creation of encumbrances that harmed shareholders’ rights.
- Failure to disclose important events required under SEBI’s LODR Regulations, 2015.
- Use of opaque corporate and audit structures to hide liabilities and avoid regulatory supervision.
The report also flagged inflated valuations of assets, hidden liabilities, questionable accounting practices, and suspicious donations to promoter-linked entities.
Viceroy said it had written complaint letters to SEBI on July 14 and to RBI on July 15 with these findings. It later published the letters online saying that no proper public response came despite the seriousness of the issues.
In response, Vedanta obtained a legal opinion from former Chief Justice of India DY Chandrachud. He advised that Vedanta could file a defamation case against Viceroy. However, Viceroy strongly criticised this legal opinion.
Petitioner Shakti Bhatia then approached the Supreme Court, claiming that he had independently verified some of the points in Viceroy’s report.
By checking MCA21 records, SEBI disclosures, and Registrar of Companies filings, he said he found evidence of undisclosed related-party transactions.
Bhatia alleged that some very large transactions were carried out with companies that were not officially declared as related parties, nor approved by shareholders as required under law.
He argued that if these allegations are true, they would amount to serious violations of the Companies Act, 2013, and SEBI’s LODR Regulations. According to him, such practices would be financial fraud and would badly affect minority shareholders.
Case Title:
Shakti Bhatia Vs Union of India
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