New Delhi. The Supreme Court’s decision has come on the allegations made by short seller Hindenburg Research against Gautam Adani’s companies. The Supreme Court bench of Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Mishra has given the verdict. The court said that SEBI investigated 22 allegations. The court has refused to interfere in the investigation of SEBI and has declared the investigation correct. The court has said that in the two cases in which SEBI is investigating, it should submit its report within 3 months. The court has given a big blow to those who filed petition on the issue of investigation against Adani Group.
Supreme Court judgment Adani-Hindenburg Row
– power of SC to enter regulatory domain of SEBI in framing delegated legislation is limited
– no valid ground invoked for us to direct SEBI to revoke its regulations
– probe to be completed by SEBI in 3 months given SG’s assurance… pic.twitter.com/sumU1DdQ2b
— Bar & Bench (@barandbench) January 3, 2024
The Supreme Court had reserved its decision on the Hindenburg and Adani issue on 24 November 2023. American short seller company Hindenburg Research had released a report in January 2023 alleging major irregularities in Adani Group companies. Politics was also heated in this matter. After which an application was filed in the Supreme Court to investigate Adani Group. The Supreme Court had asked SEBI to investigate the allegations against Adani. Today the Supreme Court has said that it does not see any logic in asking SEBI to change its rules. This has brought great relief to Adani Group.
Hindenburg’s report came on 24 January 2023. After this report, there was heavy selling of shares of Adani companies. Due to this, Gautam Adani fell down from the position of third richest person in the world. On March 2, 2023, the Supreme Court had asked SEBI to investigate the allegations made by Hindenburg against Adani. Apart from this, the court had also formed a committee of 6 experts. SEBI had given reports in the court in 22 out of 24 cases. Whereas, interim reports were submitted in 2 cases. Hindenburg had released the report titled ‘Adani Group: How the World’s Third Richest Man is Pulling the Biggest Con in Corporate History’. Hindenburg had said in the report that it had identified 38 shell companies, which are controlled by Gautam Adani’s elder brother Vinod Adani. These companies are in Mauritius, Cyprus, UAE, Singapore and Caribbean islands.
The report alleges that these shell companies were used for stock manipulation and money laundering. The Hindenburg report criticized investors, journalists, citizens, and even politicians for suppressing the fraud out of fear of Adani. Hindenberg Research had said that Adani Group companies are linked to each other. If something goes wrong in any one company of Adani, the entire group will collapse. Also in the report, Hindenburg said that except Adani Ports and Adani Wilmar, the ratio of 5 companies of the group is below 1. Allegations of insider trading etc. were also made.
The Supreme Court had scheduled the final hearing of the Adani-Hindenberg Research case on 24 November 2023. That day, Chief Justice DY Chandrachud had told petitioner’s lawyer Prashant Bhushan that we cannot accept Hindenburg’s report as the final truth. On this, Prashant Bhushan had said that SEBI did not investigate Adani Group properly and the court should see that Adani’s shareholders are not cheated. The petitioners had raised doubts on SEBI itself. He said that the Intelligence Directorate had given information about the Adani case to the SEBI chief in 2014 itself. Despite this, SEBI did not investigate. At the same time, Adani Group said that in all the cases in which SEBI had earlier investigated against it, the market regulator had given clean chit to the group.