Adani-Hindenburg Case: Key Highlights Of The Supreme Court Verdict

The Supreme Court dismissed allegations against the Adani Group and reposed confidence in SEBI's investigation in the Adani-Hindenburg matter.

The top court ruled that petitioners could not provide enough material to transfer the investigation to a special investigation team or the CBI.

The top court disposed of the petitions, finding that the "threshold for a transfer of investigation" has not been made out. The petitioners’ reliance on DRI's letter "is inconclusive", Chief Justice of India DY Chandrachud said, reading the judgment.

Here are the key highlights from the Supreme Court verdict in the Adani-Hindenburg case:

The power of this court to enter the regulatory domain of SEBI in framing delegated legislation is limited. The court must refrain from substituting its own wisdom over the regulatory policies of SEBI. The scope of judicial review when examining a policy frame by a specialised regulator is to scrutinise whether it violates fundamental rights, any provision of the Constitution, any statutory provision, or is manifestly arbitrary

No valid grounds have been raised for this court to direct study, to revoke its amendment amendments to the FPI Regulations and the LODR Regulations, which were made in exercise of its delegated legislative power. The procedure followed in arriving at the current shape of the regulations does not suffer from irregularity or illegality. The FPI regulations and LODR regulations have been tightened by the amendments in question.

SEBI has completed 22 out of the 24 investigations into the allegations levelled against the Adani Group. Noting the assurance given by the solicitor general on behalf of SEBI, we direct SEBI to complete the two pending investigations expeditiously, preferably within three months.

This court has not interfered with the outcome of the investigation by SEBI. SEBI should take its investigations to the logical conclusion in accordance with Law.

The facts of this case do not warrant the transfer of investigation from SEBI in an appropriate case. This court does have the power to transfer an investigation being carried out by an authorised agency to an SIT or to the CBI. Such a power is exercising extraordinary circumstances when the competing authority portrays a glaring, willful and deliberate inaction in carrying out the investigation. The threshold for the transfer of investigation has not been demonstrated to exist.

Reliance placed by the petitioner on the OCCRP report to suggest that SEBI was lackadaisical in conducting investigations is rejected. Reliance on any third party report without verification cannot be taken as proof. Whether the petitioners’ reliance on the letter by the DRI is misconceived as the issue has already been settled by concurrent findings of DRI by Additional Director General CESTAT and this court.

The allegation of conflict of interest against members of the (Supreme Court-appointed) committee are unsubstantial, unsubstantiated and addicted.

SEBI and the investigative agencies of the Union Government shall probe whether the loss suffered by Indian investors due to the conduct of Hindenburg Research and any other entities in taking short positions involved any infraction of law; and if so, suitable action shall be taken.

The Union government and SEBI shall constructively consider the suggestions of the expert committee… These may be treated as a non-exhaustive list of recommendations and the Government of India and SEBI will produce the report of the expert committee and take any further actions as are necessary to stand in the regulatory framework, protect investors and ensure the orderly functioning of the securities market.