The Supreme Court’s decision on Wednesday has given a big relief to the Adani Group. The Supreme Court in its judgment said that the Hindenburg case cannot serve as a basis to challenge the investigation by capital markets regulator SEBI. A bench headed by Chief Justice of India DY Chandrachud and comprising Justices JB Pardiwala and Manoj Mishra said no valid reasons exist for transferring the investigation to the Special Investigation Team (SIT).
SEBI had investigated 22 out of 24 cases related to allegations made by US-based short seller Hindenburg Research. The court gave SEBI an additional three months to complete its investigation in the remaining two cases.
Further, the Court directed both the Government and SEBI to assess if Hindenburg has flouted market shorting rules and take appropriate action based on their findings.
Chief Justice Chandrachud, while delivering the judgement emphasised that third-party reports lacking verification cannot be considered solid evidence. The Court strongly upheld SEBI’s investigation into the matter and rejected the notion of transferring the investigation from SEBI on the basis of such reports.
Citing the arguments of lawyer Prashant Bhushan, the Court reiterated that Hindenburg’s allegations and the OCCRP report targeting Adani Group cannot be considered as absolute truth.
Furthermore, the Court highlighted the importance of public interest jurisprudence, and stressed the need for well-researched petitions supported by certified reports.
The petitions related to the issue were filed by lawyers Vishal Tiwari and ML Sharma, Congress leader Jaya Thakur and activist Anamika Jaiswal. These petitions alleged that the Adani Group inflated its share prices, leading to a significant fall in the shares of some group entities after the Hindenburg Research report on January 24 last year.
Adani Group described the report as a deliberate attempt to misrepresent facts and manipulate perceptions.
The Court justified its decision to reject the transfer of the investigation to the SIT, and emphasised that such a move should be made only in exceptional circumstances supported by strong, logical justification.
Acknowledging the Hindenburg case as an important lesson, the Court urged the Center and SEBI to implement the committee’s suggestions to strengthen the investor protection mechanism.
Solicitor General Tushar Mehta, representing SEBI, informed the court that investigation into 22 of the 24 suspicious transactions has been completed, while information from foreign agencies is awaited for the remaining two.
A separate court-appointed committee in its report from May last year cleared Adani Group of regulatory failure or price manipulation, and affirmed the group’s efforts to reassure retail investors amid the market turmoil arising from the Hindenburg report.