The Supreme Court on Thursday dismissed a public interest litigation (PIL) filed by a group of investors against the Adani Group, alleging fraud, manipulation and insider trading in the stock market. The PIL had sought a direction to the Securities and Exchange Board of India (SEBI) to regulate the amendments made by the Adani Group in its shareholding pattern and financial statements.
The apex court, however, refused to interfere in the domain of SEBI, which is the statutory regulator of the securities market. The court said that it had no valid grounds to direct SEBI to regulate its amendments made in exercise of delegated legislative powers. The court also said that SEBI had the expertise and the authority to deal with the matter and that the court should not substitute its own opinion for that of SEBI.
The court noted that SEBI had already initiated a probe into the allegations against the Adani Group and had completed the investigation into 22 out of 24 allegations. The court directed SEBI to complete the remaining two allegations within three months and take logical conclusions in accordance with the law.
The court also asked the government and SEBI to look into the possible short selling infractions by the Adani Group due to the Hindenburg report, which had accused the group of inflating its assets and revenues through a complex web of shell companies. The court said that the report had raised serious issues that needed to be examined by the authorities.
The court, however, rejected the demand for a separate special investigation team (SIT) probe or any questions raised over the bona fides of the expert committee appointed by SEBI to assist in the investigation. The court said that the petitioners had not shown any malafide or bias on the part of the committee or SEBI and that the court had full faith in their impartiality and competence.
The PIL was filed by a group of investors, led by Prashant Bhushan, a senior advocate and activist, who had alleged that the Adani Group had indulged in fraud, manipulation and insider trading in the stock market and had caused huge losses to the investors and the exchequer. The petitioners had claimed that the Adani Group had violated the SEBI regulations, the Companies Act, the Income Tax Act and the Prevention of Money Laundering Act.
The Adani Group, on the other hand, had denied the allegations and had said that they were baseless and motivated by vested interests. The group had said that it had complied with all the applicable laws and regulations and had cooperated with SEBI in the investigation. The group had also said that the Hindenburg report was a malicious attempt to tarnish its reputation and that it had taken legal action against the report.
The Adani Group is one of the largest conglomerates in India, with interests in sectors such as energy, ports, airports, logistics, mining, agribusiness and defence. The group has been facing scrutiny and criticism from various quarters over its alleged proximity to the ruling BJP government and its rapid expansion and valuation in the stock market.