NEW DELHI: In a major relief to the Adani Group, the Supreme Court on Wednesday rejected a batch of pleas seeking a court-monitored probe into allegations of stock-price manipulation and other irregularities levelled by US-based short-seller Hindenburg against the group.
In its 46-page verdict, the SC said there were no grounds to transfer the probe from Sebi to a special investigation team. It also directed the stock markets regulator to complete its ongoing investigation into the allegations within three months.
Hindenburg had in its report released in January 2023 alleged that the Adani Group had been manipulating stock prices of its group firms. Following this, the share value of various Adani firms plunged. In September, another report by the Organized Crime and Corruption Reporting Project claimed that the Adani Group used offshore shell companies to invest in its own stocks.
The three-judge bench headed by Chief Justice D Y Chandrachud observed that the petitioners relied solely on unverified third-party claims and newspaper reports, which did not inspire confidence in the court’s mind to interfere in the regulator’s probe. “A report by a third-party organization without any attempt to verify the authenticity of its allegations cannot be regarded as conclusive proof,” it said.
The bench, also comprising judges J B Pardiwala and Manoj Misra, said: “The petitioners cannot assert that an unsubstantiated report in the newspapers should have credence over an investigation by a statutory regulator whose investigation has not been cast into doubt on the basis of cogent material or evidence.”
The bench said while it can transfer an investigation to a Special Investigation Team (SIT) or the CBI, it is done only in extraordinary circumstances when there is a glaring, deliberate inaction by the competent authority. It noted that the court has already exercised its extraordinary powers by setting up an Expert Committee to investigate whether there has been a regulatory failure.
“To expect the Court to monitor the investigation indefinitely, even after the committee has submitted its report and Sebi has completed its investigation in 22 out of 24 enquiries, is not warranted,” it added. The SC also sought a probe into whether the loss suffered by Indian investors due to the conduct of the Hindenburg Research in taking short positions violated law.
“Sebi and the investigative agencies of the Union Government shall probe into 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 the law and if so, suitable action shall be taken,” the verdict said.
‘Allegations against panel unfounded’
The bench rejected allegations of conflict of interest levelled against some members of the court-appointed expert panel. It also cautioned against filing petitions that lack adequate research and rely on unverified and unrelated material