Adani-Hindenburg | 'SEBI Can't Take Indefinitely Long Period', Supreme Court Says While Hearing Plea Seeking More Time To Complete Probe

The Supreme Court on Friday adjourned to May 15 the hearing of the application filed by the Securities and Exchange Board of India (SEBI) seeking six months more time to complete its probe into allegations made by US-based short seller firm Hindenburg Research against Adani group companies about stock price manipulations.

During the hearing, the Court orally said that it cannot allow six months more additional time as sought by SEBI and indicated that it can grant three months time at the maximum. The bench comprising Chief Justice of India DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala pointed out that the SEBI's stand had been that it had started probing the matter much before the Court's directions.

The two months time originally given to the SEBI by the Supreme Court as per its March 2 order had ended on May 2. 

Solicitor General of India Tushar Mehta, appearing for SEBI, said that at least six more months time is required considering the complexities of the matter. He pointed out that the SEBI has said in its application that at least 15 months is actually needed and that it will take best possible efforts to complete the investigation in 6 months time.

Expressing disinclination to allow six months, CJI DY Chandrachud stated : 

"Six months is an unfair time...we will place the matter around 14th August. You complete your investigation in three months and come back to us. There has to be alacrity..We can't say you need minimum 6 months. SEBI cannot take an indefinitely long period".

Advocate Prashant Bhushan, appearing for one of the petitioners who had approached the Supreme Court seeking probe into the Adani-Hindenburg issue, opposed the application. Bhushan said that SEBI is a member of the International Organisation of Securities Commission and hence there was no difficulty in getting information from foreign countries regarding international transactions. He further said that the stand of the SEBI is that it had started investigating into some of the alleged benami transactions way back in 2017.

SG said that the six months time is a reasonable estimate, considering the contours of the matter.

Ultimately, the bench decided to adjourn the hearing, saying that it wished to read the report of the expert committee led by Justice AM Sapre, which was constituted by the Court on this issue.

Background

It was on January 24 that US-based Hindenburg published its report accusing Adani group of widespread manipulations and malpractices to inflate its stock prices. Adani Group refuted the allegations by publishing a 413-page reply.

On March 2 2023, the court constituted a committee and appointed the following persons as the members of the committee– Mr OP Bhat (former Chairman of SBI), retired Justice JP Devadhar, Mr KV Kamath, Mr Nandan Nilakeni, Mr. Somasekharan Sundaresan. The Committee was held to be under the head of former Supreme Court judge Justice AM Sapre. The court directed the committee to submit its report in a sealed cover before this court within 2 months. However, the court remarked that the constitution of the expert committee did not divest SEBI of its powers or responsibilities in continuing with its investigation into the volatility in the securities market in India. SEBI was also directed to submit a status report within a period of two months.
Later, the SEBI filed an application in the Supreme Court seeking a six-month extension to complete its probe into allegations.