SC declines to order SIT or CBI probe in Adani-Hindenburg row

In a favorable development for the Adani group of companies, the Supreme Court declined, on Wednesday, to shift the investigation from the Securities and Exchange Board of India (SEBI) to a Special Investigation Team (SIT) or the Central Bureau of Investigation (CBI) in connection with the Adani-Hindenburg issue. This issue involves allegations of stock price manipulation by the prominent Indian corporate entity.

The bench, consisting of Chief Justice of India DY Chandrachud, PS Pardiwala, and Manoj Misra, emphasized the limited scope of the apex court’s authority to intervene in the regulatory realm of SEBI. It clarified that the judicial review’s scope is confined to assessing potential violations of fundamental rights. The Supreme Court asserted that the case’s circumstances did not justify transferring the investigation to the SIT or any other agency. Furthermore, the court expressed confidence in SEBI’s investigation, stating that there was no evidence to question its integrity.

The court’s verdict followed a series of petitions seeking a court-monitored or CBI investigation into allegations made by US-based firm Hindenburg Research against the Adani group. These allegations, which claimed market manipulation, prompted a significant decline in the share values of various Adani companies, reportedly resulting in a loss of USD 100 billion.

Rejecting claims of regulatory failure by SEBI, the court emphasized that the market regulator cannot be expected to solely rely on press reports. Instead, SEBI was urged to complete its investigation within three months into the two pending cases out of the total 24 cases related to the issue.

The case revolves around accusations, part of a report by Hindenburg Research, suggesting that Adani artificially inflated its share prices. The Adani Group vehemently denies these charges, asserting its compliance with all applicable laws and disclosure requirements.

Petitions contended that amendments to the Securities and Exchange Board of India Act shielded the Adani Group’s regulatory violations and market manipulations from detection. In response, the Supreme Court directed SEBI to conduct an independent investigation and constituted an expert committee led by retired Supreme Court judge Justice AM Sapre. In May of the previous year, the committee’s report found no prima facie lapses by SEBI in the matter.

While delivering the verdict, the Supreme Court highlighted its lack of grounds to discredit SEBI’s actions and underscored that it cannot treat information from the Hindenburg report as an absolute truth, emphasizing the need for a cautious approach toward media-published content.