Adani-Hindenburg case verdict: Key takeaways

The Hindu decodes the key takeaways from the Supreme Court’s verdict in the Adani-Hindenburg case

The story so far: The Supreme Court today refused to transfer the ongoing probe by market regulator Securities and Exchange Board of India (SEBI) into Hindenburg Research’s allegations against the Adani Group to any other agency, saying that the scope of judicial review in such cases is “limited”.

On January 24 last year, the investment research firm Hindenburg Research LLC released a report alleging that the conglomerate had engaged in “brazen stock manipulation and accounting fraud scheme over the course of decades” and that key listed companies had “substantial debt”. A sharp fall in the share value of various Adani companies, reportedly to the tune of $100 billion, was seen soon after the report was published. 

This led to a batch of petitions being filed before the top court alleging that changes to the Securities and Exchange Board of India Act (SEBI Act) had provided a ‘shield and an excuse’ for the Adani Group’s regulatory contraventions and market manipulations remaining undetected.

On March 2 last year, the court asked SEBI to independently investigate the matter, apart from constituting an expert committee headed by former Supreme Court judge Justice A.M. Sapre to scrutinise whether there had been a regulatory failure in dealing with the allegations leveled by Hindenburg. The committee also included former State Bank of India chairperson Om Prakash Bhatt; retired Bombay High Court judge Justice J.P. Devadhar; National Bank of Financing Infrastructure and Development chairperson K.V. Kamath; entrepreneur Nandan Nilekani; and advocate Somasekhar Sundaresan who was subsequently elevated to Bombay High Court judgeship.

In its report submitted in a sealed cover, the expert committee concluded that there had been “no regulatory failure” on the part of SEBI in the matter. However, SEBI sought an extension of its probe citing the complexity of the transactions involved.

After noting that SEBI had completed the investigation in 20 out of the 22 matters in connection with the allegations leveled against the Adani group, a bench led by Chief Justice of India (CJI) D.Y. Chandrachud today ordered the probe into the two pending cases to be completed expeditiously, preferably within three months.

Read the judgment here.