The Supreme Court has dismissed a petition seeking a review of its January 3 verdict, which refused to order a separate investigation into allegations of accounting fraud and stock manipulation against Adani Group companies. These allegations were initially raised in a report by US short-seller Hindenburg Research in January 2023.
A three-judge bench, led by Chief Justice of India (CJI) Dhananjaya Y Chandrachud, found no merit in the plea moved by Anamika Jaiswal, one of the original writ petitioners in the case.
“Having perused the review petition, there is no error apparent on the face of the record. No case for review under Order XLVII Rule 1 of the Supreme Court Rules 2013. The review petition is, therefore, dismissed,” stated the bench, which also included Justices JB Pardiwala and Manoj Misra. The review petition was dismissed on May 8, but the order was made public on Monday. Judges consider review petitions in their chambers without holding oral hearings.
Jaiswal’s petition, filed in February, claimed that the court’s judgment contained errors apparent on the face of the record and overlooked the Securities and Exchange Board of India’s (SEBI) regulatory failures, which contributed to alleged regulatory contraventions and statutory violations.
Arguing that the court should not have endorsed SEBI’s investigation without acknowledging the outcomes of the probe, Jaiswal pointed out that SEBI’s status report merely indicated the completion status of the 24 investigations without disclosing any findings or details on actions taken. She asserted that unless SEBI’s investigation findings are publicly reported, it cannot be concluded that there was no regulatory failure.
The review plea further argued that legislative amendments made by SEBI in 2018 and 2019, which modified the Foreign Portfolio Investors (FPI) regulations, diluted the requirements for disclosing beneficial owners (BOs) and listing disclosures by removing the prohibition against an FPI having an “opaque structure.” The petition contended that the apex court failed to notice the impact of these amendments.
In its January verdict, the top court concluded that there was no material to show “glaring, willful, or deliberate inaction” by SEBI in its investigation or any suggestion of regulatory failure by the market regulator. The court dismissed the reliance on the Hindenburg report or other unsubstantiated news reports as the basis for questioning SEBI’s comprehensive investigation. It rejected pleas, including one filed by Jaiswal, for the creation of a special investigation team (SIT) to investigate Hindenburg’s allegations, noting that newspaper articles or reports by third-party organizations cannot be treated as conclusive proof of SEBI’s probe inadequacy.
The judgment recorded that SEBI had completed investigations into 22 out of 24 allegations against the Adani group, giving the regulator three months to conclude the two pending investigations. It also directed investigative agencies of the Union government to probe whether the loss suffered by Indian investors due to the conduct of Hindenburg Research and other entities involved any infraction of law and to take suitable action if so.
Hindenburg’s report, published in January 2023, claimed “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led group. Though the conglomerate rejected the report as “unresearched” and “maliciously mischievous,” it triggered a massive rout of Adani group stocks, which lost over $140 billion in days and forced the cancellation of a planned ₹20,000 crore share sale.
A set of petitions filed separately by lawyers and activists demanded a court-monitored probe into the matter by setting up an SIT under the supervision of a retired judge. Some petitioners also questioned the validity of the 2018 and 2019 amendments in the FPI regulations. However, the court judgment rejected the petitioners’ contentions, ruling that the impugned amendments had tightened the norms on disclosure of BOs under the FPI and LODR (Listing Obligations and Disclosure Requirements).
