SC refuses to transfer Adani’s case from Sebi

Supreme Court has refused to transfer the investigation currently being carried out by the Securities and Exchange Board of India to a separate SIT. Court said its power to enter the regulator’s domain was limited, and asked Sebi to conclude its investigation into the allegations by US-based short-seller Hindenburg Research within three months.

Sebi has completed 22 out of the 24 investigations into the allegations levelled against the Adani group. A January 24 report by US-based short-seller Hindenburg Research had accused Adani Group of significant governance issues, which shaved half of the group’s market capitalisation.

The three-judge bench comprising dismissed all writ petitions filed in February 2023, raising concerns over the decline in investor wealth.

“The court must refrain from substituting its own wisdom over the regulatory policies of Sebi. The scope of judicial review when examining a policy framed by a specialised regulator is to scrutinise whether it violates fundamental rights, any provision of the constitution, any statutory provision or is manifestly arbitrary,” court said in its judgment.

The SC also said that no valid grounds were raised for the court to direct Sebi to revoke its amendments to foreign portfolio investors and listing regulations. “In an appropriate case, this court does have the power to transfer an investigation being carried out by the authorised agency to an SIT or CBI,” it said, adding, such power is exercised only in extraordinary circumstances when there are “glaring, wilful and deliberate inaction in carrying out investigations”.

The apex court also asked Sebi and investigative agencies to probe into the loss suffered by Indian investors due to the conduct of Hindenburg Research, or any other entities taking short positions. “If so, suitable action shall be taken,” it added.

It also said that reliance on newspaper reports and Organised Crime and Corruption Reporting Project, cannot be regarded as “conclusive proof”.