Adani-Hindenburg Row | Plea Filed In Supreme Court Seeking Review Of Verdict Endorsing SEBI Investigation

In the latest development in the Adani-Hindenburg row, a review petition has been filed challenging the recent Supreme Court verdict that dismissed pleas for a probe into allegations of stock price manipulations by the Adani group of companies.

The plea, filed by petitioner Anamika Jaiswal, seeks a review of the January 3 judgment, which rejected calls for a Special Investigation Team (SIT) or Central Bureau of Investigation (CBI) probe, endorsing the ongoing investigation by the Securities and Exchange Board of India (SEBI).

The Supreme Court's ruling, handed out by a bench of Chief Justice DY Chandrachud, and Justices JB Pardiwala and Manoj Misra, declined to order an independent probe into the allegations raised in a report by US-based short-selling firm Hindenburg Research. The report, published on January 24, 2023, accused the Adani Group of engaging in manipulative practices to inflate stock prices. Despite calls for judicial intervention, the court upheld the integrity of SEBI's investigation, pointing to the absence of valid grounds to doubt the regulatory body's authority or impartiality.

In response to this verdict, a review petition has now been filed, citing perceived errors in the judgment and presenting new evidence that, according to the petitioner, could impact the outcome. The petition states -

"It is respectfully submitted that there are mistakes and errors apparent on the face of the impugned order and in light of certain new material that have been received by the counsel of the petitioner, there are sufficient reasons which require its review. The new documents and evidence including email communications as annexed with the review petition reveal that Adani group companies have been in flagrant violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957. The modus operandi for the same involved funds being invested by Chang Chung Ling and Nasser Ali Shaban Ahli on behalf of Vinod Adani, a member of the Adani promoter group, into stocks of Adani Group Companies through Global Opportunities Fund, Emerging India Focus Funds and Emerging Market Resurgence Fund. Of these, Emerging India Focus Fund and Emerging Market Resurgence Fund also find mention among the 13 suspected companies as mentioned in the expert committee report."

On the question of an apparent 'regulatory failure' on the part of the Securities and Exchange Board, which the Supreme Court in its recent ruling refused to accept, the petitioner has said, "There are many instances through which SEBI's regulatory failures are readily apparent. Such failures have eventually contributed to alleged regulatory contraventions and statutory violations. The SEBI in its status report has only updated the status of the 24 investigations as complete or incomplete and failed to disclose any findings or details on action taken. It cannot be concluded that there has been no regulatory failure unless the findings of the SEBI investigations are publicly reported."

The petitioner has also questioned the court's conclusion that reports by third-party organisations such as the Organised Crime and Corruption Reporting Project (OCCRP) were not 'conclusive proof' of the inadequacy of SEBI's investigation, saying -

"The investigative findings of the Organised Crime and Corruption Reporting Project (OCCRP), a network of investigative journalists, were based on a trove of documents which was also shared with acclaimed international dailies such as The Financial Times and The Guardian. The relevance of the documents unearthed by the OCCRP arises from the fact that it identified two offshore funds which were found to have invested millions of dollars into Adani group companies. The names of the same two FPIs figure in the list of 13 overseas entities suspected by SEBI."

The petition also challenges the court's decision to approve SEBI's amendments to Foreign Portfolio Investor (FPI) and Listing Obligations and Disclosure Requirements (LODR) regulations, arguing that these amendments may have wider implications for market integrity and investor protection. The petition further contests the court's dismissal of concerns regarding conflict of interest among members of the Expert Committee tasked with examining the allegations against the Adani Group. It urges a reconsideration of the committee's findings and recommendations, stressing the importance of robust regulatory frameworks to safeguard investor interests and ensure market transparency.

Case Details

Anamika Jaiswal v. Union of India & Ors.