Adani-Hindenburg PILs: Supreme Court Asks SEBI To Submit Investigation Update By Aug. 14

The Supreme Court accepted the request of the market regulator to give it more time to complete its investigation in the Adani-Hindenburg matter.

While the Securities and Exchange Board of India had asked for at least six months, the apex court has given the regulator time till Aug. 14 to update the court on the course of its investigation.

Solicitor General Tushar Mehta responded by saying that the regulator might need more time. To that, the apex court said it might consider extending the time based on the progress report filed by SEBI in August.

The Supreme Court bench also said that the expert committee has submitted a report bearing in mind the timeline of two months. "In order to enable the court and counsel to analyse the report and reflect on the suggestions made by the expert committee, the proceeding shall be listed on July 11, 2023," the bench said.

The expert committee is expected to continue to assist the court, and it may hold further deliberations in the meanwhile, it said. "The committee would be requested to take up any further aspects or suggestions as may be formulated by the court, following the deliberations when the proceedings are further listed for hearing."

Appearing for one of the petitioners, Senior Advocate Prashant Bhushan said that SEBI has to put on record as to what happened to the investigations that were happening since 2016. SEBI countered by saying that the 2016 investigations, which are being referred to, pertain to a completely different matter.

"The remit of the petition is not the 2016 investigation. The remit is pertaining to the Hindenburg report," said Solicitor General Tushar Mehta.

Bhushan said that it has been stated in the Parliament in 2021 that SEBI was investigating the Adani Group companies.

Advocate Vishal Tiwari said that the market regulator has not even informed who they have appointed to undertake the investigation.

The three-judge bench of Chief Justice Of India DY Chandrachud, and Justices PS Narasimha and JB Pardiwala directed that the copies of the expert committee's report should be given to the parties and the counsel to assist the court in further deliberations.

The CJI said that SEBI must place on record its report on 2016 and 2020 investigations which pertained to Global Depository Receipts and Minimum Public Shareholding, respectively.

In an affidavit filed on Monday, the regulator had said any premature conclusion without having all the facts on record would not serve the ends of justice. “Extension of time filed by SEBI is meant to ensure carriage of justice keeping in mind the interest of investors,” it said.

The regulator's affidavit also elaborated on the arguments made by Solicitor General Tushar Mehta regarding ongoing investigations against the Adani Group. It said that allegations that investigation against the Adani companies has been going on since 2016 is "factually baseless". That investigation pertained to the issuance of Global Depository Receipts of 51 companies. It is complete and no listed company of Adani Group was a part of the aforesaid companies.

After Hindenburg Research's report and Adani Group's counter in January, four public interest petitions were filed before the apex court. The PILs had broadly asked for directions regarding allegations against the Adani Group.

During the hearings, the Supreme Court had voiced concern when it was revealed that Adani Group investors had lost a total of Rs 10 lakh crore after short-seller firm Hindenburg had made its report public.

On March 2, the Supreme Court had directed SEBI to investigate whether there have been any disclosure failures and if there was any manipulation of Adani stock prices in contravention of existing laws.

The regulator was directed to submit its report within two months, but on April 29, SEBI made submissions before the apex court asking for six months to conclude its investigation.

The Supreme Court had also set up an independent committee headed by Justice (retired) Abhay Manohar Sapre. Other members of the committee included OP Bhat, KV Kamath, Nandan Nilekani, Somashekhar Sundaresan, and retired Justice JP Devadhar.

The committee was directed to provide an overall assessment of the situation, including the causal factors which had led to volatility in the securities market in the recent past. 

It was also asked to suggest measures to strengthen investor awareness, to investigate whether there has been regulatory failure in dealing with the alleged contravention of securities laws in the matter, and to suggest measures to strengthen the statutory and regulatory framework for the protection of the investors.

The committee had submitted its report last week.

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