Victory for Adani as Supreme Court rules out transferring SEBI probe in Hindenburg case; truth prevailed, says Gautam Adani

Delivering the judgment, the Supreme Court bench of Chief Justice of India DY Chandrachud and justices JB Pardiwala and Manoj Misra ruled that "there are no grounds to transfer the probe to a special investigation team," thus turning down the plea for a CBI probe.

The judges said the scope of power of the Supreme Court to enter into the regulatory domain of SEBI in framing delegated legislation is limited and scope of judicial review is only to see whether any fundamental right has been violated, according to a report by Bar and Bench website.

"No valid ground invoked (in this case) for us to direct SEBI to revoke its regulations and the current regulations are tightened by amendments in question," the Court said, the site quoted.

Following the verdict, Gautam Adani posted on X: "The Hon'ble Supreme Court's judgement shows that: Truth has prevailed. Satyameva Jayate. I am grateful to those who stood by us. Our humble contribution to India's growth story will continue. Jai Hind."

The SEBI has investigated 22 out of the 24 cases linked to the US-based short seller Hindenburg Research's allegations. The Supreme Court gave the SEBI three months to complete investigation in the remaining two cases, media reports said.

The Court said that in the present case, there has been no regulatory failure by SEBI and the market regulator cannot be expected to carry on its functions based on press reports though such report can act as inputs for SEBI.

"Investigative reports by press can act as inputs for SEBI but cannot be taken as credible evidence or a proof of regulatory failure by SEBI and it cannot cast doubt on the investigation being carried on by a statutory body," the Court made it clear, according to Bar and Bench website.

"This Court has the power under Articles 32 and 142 to transfer the probe to CBI etc but such powers can only be used sparingly and this court will not ordinarily supplant this role and the petitioners must put forth strong evidence to show that the investigative agency (SEBI) acted in a biased manner," the bench ruled.

The US-based firm Hindenburg Research had made allegations against the Adani group of companies, specifically related to stock market violations.

On November 24, the bench led by the Chief Justice of India (CJI) reserved its judgment on the pleas related to the Adani-Hindenburg issue.

Throughout the proceedings, the bench hinted at issuing directions to the Securities and Exchange Board of India (SEBI).

In January 2023, Hindenburg accused the conglomerate based in Ahmedabad, dealing in ports to power, of "brazen stock manipulation and accounting fraud." The Adani group strongly refuted these allegations, characterizing the report as "a calculated attack on India."

Following numerous Public Interest Litigations (PILs) on the matter, the Supreme Court established an expert panel in March 2023 to examine the issue and propose recommendations for improving the existing regulatory framework.

The court had granted the Securities and Exchange Board of India (SEBI) until May to complete its investigation into the allegations.

In May, the apex court extended SEBI's deadline to conclude the investigation until August 14.

However, this extension was shorter than the six months initially requested by the markets regulator.

On November 24, SEBI informed the court that it would not be seeking any further extension of time and that a significant portion of the investigation had been completed.