New Delhi: The Securities and Exchange Board of India (SEBI) has officially closed its proceedings against the Adani Group, its key executives, and two private entities, Milestone Tradelinks Pvt. Ltd. (MTPL) and Rehvar Infrastructure Pvt. Ltd. (RIPL), effectively dismissing allegations of related-party transaction violations raised by Hindenburg Research.
In a final order dated September 18, 2025, SEBI concluded that the allegations were "not established" and issued no punitive directions.
The SEBI show-cause notice (SCN) was initiated following a report by Hindenburg Research published on January 24, 2023, which questioned the funding of Adani Enterprises Ltd. (AEL) and Adani Power (APL) through MTPL and RIPL.
SEBI’s investigation, spanning from financial years 2018-19 to 2022-23, alleged that Adani Ports & Special Economic Zone Limited (APSEZ), APL, and AEL used MTPL and RIPL as "conduits" to facilitate undisclosed related-party transactions. The SCN contended that viewed from a "substance over form" perspective, these were, in fact, related-party transactions that should have been disclosed and approved by the Audit Committee and shareholders as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).
The SCN also targeted specific individuals. Rajesh Shantilal Adani and Gautam Shantilal Adani were accused of being instrumental in devising a scheme to avoid disclosure and approval requirements for these transactions. Jugeshinder Singh, the Group CFO, was alleged to have been involved in a fraudulent scheme to circumvent related-party transaction requirements. The conduit entities, MTPL and RIPL, were also accused of knowingly facilitating this circumvention, despite having "very insignificant net worth".
Adani Group’s defense
The Adani Group and the other named entities vehemently denied the allegations. Their primary defense rested on the legal interpretation of the LODR Regulations as they stood during the investigation period.
They argued that the transactions were not "related party transactions" under the un-amended LODR regulations, as the definition only covered direct transactions between related parties. The Notices highlighted that the definition was only broadened in 2021 to include indirect transactions, and this amendment was given a deferred, prospective effective date of April 1, 2023. They contended that SEBI was impermissibly attempting to apply a prospective law retrospectively, which is a violation of established legal jurisprudence. The defense cited several Supreme Court judgments to support their argument that concepts like "substance over form" cannot be invoked against the clear, plain language of the law.
Furthermore, the Adani Group stated that the loans given and taken were genuine commercial transactions, conducted in the normal course of business. Detailed tables were provided in the SEBI order showing the loan amounts, interest rates, and full repayment of both principal and interest within the investigation period. The document also noted that while the aggregate loan amounts might appear large, the maximum outstanding amount at any given time was much lower, which indicated a regular rotation of funds and was a reason for the lower interest amount.
SEBI’s conclusion
After considering the submissions from all parties, SEBI’s final order sided with the arguments put forth by the Adanis. The WTM (Whole Time Member) of SEBI affirmed that the doctrine of "substance over form" could not be applied to override the explicit, un-amended provisions of the LODR Regulations.
The order also noted that the Supreme Court had already reviewed and accepted the findings of an Expert Committee in a related matter. This committee had concluded that the 2021 amendments to the LODR Regulations were prospective in nature and that there was no regulatory failure on SEBI’s part in giving them deferred effect. The Supreme Court had rejected the plea to revoke these amendments and found no illegality in the procedure followed by SEBI.
SEBI’s final order concluded that since the transactions were not considered related-party transactions under the law applicable at the time, there was no violation of the LODR Regulations. Consequently, the allegations of fraudulent conduct under the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations were also dismissed, as there was no evidence of a scheme or artifice to conceal a fraud. The document states, "the allegations made against Noticees (Adani Group and related entities) in the SCN are not established" and that no liability arises for any of the named parties. The proceedings were disposed of without any further direction.