Advocate Vishal Tiwari from Delhi has filed an appeal before the Supreme Court (SC) challenging the court registry's refusal to list an application seeking a status report on the action taken by market regulator Securities and Exchange Board of India (SEBI) on allegations made by Hindenburg Research against Adani group. He also urged the apex court to direct the market regulator to expedite and complete its investigation amidst the latest allegations by Hindenburg Research against SEBI chief.
In its order on 3 January 2024, the apex court directed SEBI to complete its investigation in three months. Adv Tiwari says, "By using the word 'preferably' it cannot be understood that no timeline was fixed. When specifically three months have been mentioned in the order, it is sufficient to be understood as prudent that a fixed period is laid down for the completion of the pending investigations."
Since the three-month 'deadline' for the SEBI probe had elapsed, Adv Tiwari, who is one of the petitioners in the earlier case in which the 3rd January order was passed, sought to file a fresh application before the SC.
He also mentioned the latest report from the US-based short-seller that alleges SEBI chairperson Madhabi Puri Buch and her husband Dhaval Buch are involved in the same offshore Bermuda and Mauritius funds allegedly controlled by Vinod Adani, the elder brother of Adani group chairman Gautam Adani.
"Because the SEBI chief has denied these allegations as baseless and this court also held that third-party reports cannot be considered. But this all has created an atmosphere of doubt in the minds of the public and investors and in such circumstances, it becomes incumbent for SEBI to conclude the pending investigations and declare the conclusion of the investigations," Adv Tiwari says.
When he had filed an application earlier, on 5 August 2024, the registrar of the SC declined to register it, saying it was 'thoroughly misconceived and did not disclose any reasonable cause.' "The Court did not give any directions either to the Union government or the SEBI to submit the status report or conclusive report to this court. In the absence of any such categorical direction to the Union government and SEBI to submit the report(s), this application for direction for compliance... is wholly misconceived," the registrar says.
Adv Tiwari has challenged the order before the apex court. Further, he says, "It (the plea) is important in the public interest and for the interest of the investors who lost their funds after the publication of Hindenburg report in 2023 against Adani group. The right to know about the investigations led by SEBI and its conclusions are essential for the benefit of investors."
Earlier, certain writ petitions were filed with the SC seeking an independent investigation of the allegations in the short-seller's report (SSR).
During the proceedings, SC observed that SEBI was investigating the matter. SC also constituted an expert committee to investigate and suggest measures to strengthen existing laws and regulations. It also directed SEBI to consider certain additional aspects of its scope. On 6 May 2023, the expert committee submitted its report, finding no regulatory failure with respect to applicable laws and regulations. SEBI also concluded its investigations in 22 of the 24 matters as per the status report dated 25 August 2023 to the SC.
On 3 January 2024, the apex court disposed all matters in various petitions, including those relating to separate independent investigations relating to the allegations in the Hindenburg report.
Noting that SEBI has completed the investigation in 20 out of 22 matters, SC says, "Taking into account the assurance of the solicitor general, we direct SEBI to complete the investigation in the other two cases within three months.
"Reliance on newspaper reports and third-party organisations to question the statutory regulator does not inspire confidence. They can be treated as inputs but not conclusive evidence to doubt the SEBI probe. This court has not interfered with the outcome of the investigations by SEBI, which should take its investigation to its logical conclusion in accordance with the law. The facts of this case do not warrant a transfer of investigation from SEBI," held a bench presided over by chief justice Dr DY Chandrachud. (
Read: Adani-Hindenburg Row: SC Rejects SIT Probe, Says Media Reports Not Conclusive Proof)
In September last year, a non-profit global network of investigative journalists, Organised Crime and Corruption Reporting Project (OCCRP), said in an article that crores of rupees were invested in listed stocks of India's Adani group via 'opaque' funds from Mauritius that 'obscured' the involvement of alleged business partners of the Adani family. OCCRP also reported that two men, Nasser Ali Shaban Ahli (Nasser) of the United Arab Emirates (UAE) and Chang Chung-Ling (Chung-Ling) (Chinese/Taiwan), who are treated as public investors in stock exchange filings, are actually Adani insiders, which is a violation of Indian laws. This also reduced the free float of the stock, helping to manipulate the prices with less funds.
The controversial Hindenburg Research's report, inter alia, alleged that the Adani group of companies has manipulated its share prices, failed to disclose transactions with related parties and other relevant information concerning related parties in contravention of the regulations framed by SEBI and violated other provisions of securities laws.
