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On January 24, a US-based investment research firm named Hindenburg Research published a report titled 'Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History', making allegations against the conglomerate, saying that the group has been involved 'in a brazen stock manipulation and accounting fraud scheme over the course of decades.'
The Supreme Court on Tuesday, sought the status of ongoing investigations by the Securities Exchange Board of India (SEBI) into the allegations of stock price manipulation by the Adani group. The investigation was unleashed after a research think tank based out of India, Hindenberg Research, declared that the business conglomerate had indulged in fraudulent transactions and share-price manipulation.
The court said that the investigations should be expeditiously wrapped up as the extension period was about to get over in a month. The top court had on May 17, allowed SEBI's application seeking an extension of 6 months to complete its investigation into the issue, giving the regulatory body time until August 14. Today, a bench of Chief Justice of India DY Chandrachud, Justices PS Narasimha & Manoj Misra were informed by one of the petitioner's lawyer Prashant Bhushan that SEBI had ended up doing many things which were fatal to the ongoing investigations. “And the facts found in the expert committee report clearly show that there is not merely gross regulatory failure on the part of SEBI but there is no chance of SEBI proceeding anywhere with this investigation,” Bhushan added. He further argued that SEBI had amended the rules to remove the definition of opaque structures, for related part transactions, for beneficial owners etc. in order to prevent this kind of fraud from being exposed.
The bench told SEBI to inform the court as to the background of how these amendments had come into being.
Prior to this, the Solicitor General had informed Court that the SEBI had filed a response on the functionings and it was effectuated via e-filing yesterday, due to which it was not before the bench.
Bhushan pointed out that it was done deliberately because the response had already been circulated to the media and was widely reported.
The bench adjourned the hearing on the batch of pleas on the Adani-Hindenburg row, ordering that SEBI's response to the expert committee's findings are circulated among all parries. The cases are expected to be taken up after the petitions lined up before the constituted bench are heard.
On February 17, the top court had reserved its order in these batch while observing that it was inclined to maintain 'full transparency' in the matter, after which an expert committee was appointed. It submitted its report in May,
Committee is be headed by former Supreme Court judge Justice AM Sapre and will consist of OP Bhat (former Chairman of SBI), retired Justice JP Devadhar, KV Kamath, Nandan Nilakeni, and Somasekharan Sundaresan as the members.
It may be noted that recently, Solicitor General Tushar Mehta had submitted his apprehension before the Supreme Court appointing an expert committee to look into the Hindenburg Report.
"Existing agencies are fully equipped. However, responding to your lordships suggestions, we have no objection in constituting a committee. The only thing is, we don't want to send a message that a government agency needs to be overseen by a committee...", the SG had submitted before a CJI Chandrachud-led bench.
Case Title: Vishal Tiwari vs. Union of India & Other Connected Matters
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