The Supreme Court of India delivered it's verdict today on Dec 3,2023, on a series of petitions seeking an independent investigation into allegations of accounting fraud and stock manipulation against companies within the Adani Group.
The case stems from a report published by the investment research firm Hindenburg in January of the previous year. The report claimed the conglomerate to be engaged in extensive manipulation and accounting frauds over decades, placing key groups within the company in precarious financial situation due to massive debt.
The bench, comprising of DY Chandrachud, justices JP Parala, Manoj MRA, pronounced the judgement after the conclusion of arguments in the case reserved on Nov 24, 2023.
The SC in it's judgement today, affirmed that it cannot intervene in the domain of the regulatory regime, highlighting that reports by Hindenburg or any other such part can't serve as the basis for a seperate probe into the investigation. Instead, the court directed the Securities and Exchange Board Of India (SEBI), the country's premium market regulator to proceed with and continue it's investigation according to the law.
Adani Group already rejected the Hindenburg report, labeling it as unresearched and malicious. However, the repurcussions were severe, there was a massive rout of Adani group stocks, losing a staggering $140 billion within days and necessitating the cancellation of ₹20,000 crore share sale.
Following the series of events, SC established a six-member panel, led by retired SC Judge AM Sapre, to investigate regulatory failures by SEBI and alleged breaches of laws by the Adani group. The committee in it's report submitted two months later, stated that the allegations of stock price manipulation or violation of MPS norms by the Adani companies couldn't be proven "at this stage"
It did, however raised concerns about current foreign portfolio ivestment (FPI) regulations.
Vishal Tiwaru, an advocate and petitioner accentuated the SC's clear stance that third-party reports can't be considered conclusive proof, highlighting the need for evidence to support the case.
In it's directives, the law authority ordered SEBI to conclude the probe within three months. Additionally, the court warned against petitions lacking adequate research and relying on unverified materials.
Additionally, the supreme court even pointed out that both the Union govt and SEBI are yet to act upon the recommendations made by the court- appointed panel regarding regulatory improvements.
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