Adani-Hindenburg Row: Supreme Court To Decide On SEBI's Extension Plea On Monday
Solicitor General Tushar Mehta clarified that the word 'suspicious' in Sebi's plea should be read as 'alleged'.
The Supreme Court has reserved its order on SEBI's plea seeking six months more to complete the investigations into Hindenburg's allegations against the Adani Group of companies. The three-judge bench said they will pass an order on May 15, after reading the report submitted by the Justice Sapre committee.
The bench of CJI DY Chandrachud, Justices PS Narasimha and JB Pardiwala heard the application by the Securities and Exchange Board of India on the Adani-Hindenburg case on Friday. The market regulator had asked for an additional six months to conclude its investigation.
Elaborating on SEBI's request, Solicitor General Tushar Mehta told the apex court that six months is also a "compressed time". The SG also highlighted a rectification in SEBI's application saying the suspicious transactions it is examining should be read as "alleged" at this stage. "SEBI will need more time to examine alleged suspicious transactions flagged in Hindenburg's report."
Representing the petitioners, Senior Advocate Prashant Bhushan opposed SEBI's ask. He argued that the regulator has been investigating the Adani Group since 2017. SEBI is part of The International Organization of Securities Commissions, and can seek information from any jurisdiction part of IOSCO, Bhushan said.
Countering this submission, Mehta said that investigation is about something completely different. "That is on the GDR issue."
The Supreme Court noted the arguments by both sides, and told the parties that while the independent committee has submitted its report, the bench hasn't had the time to examine it as yet. "Justice Sapre's report has been submitted. We'll look at it over the weekend," the CJI said.
Earlier, the CJI had observed if the market regulator could submit the report by Aug. 14. However, after listening to the arguments, the CJI said it will rule on this application on Monday.
On Bhushan's ask to direct SEBI to disclose how far its investigation has reached, the CJI observed that it might not be appropriate at this stage. "It will harm the investigation if we ask SEBI to disclose at this stage."
The Chief Justice cautioned the petitioner's lawyer against use of terms such as "regulatory failure". The CJI said the court has never said it was a regulatory failure on the part of SEBI. All that the court has said was to check if there were regulatory lapses, he said. He asked the advocate to use responsible phrases as it involves the country's stock market.
Adani Hindenburg: The Story So Far
After Hindenburg Research's report and Adani Group's counter in January, four public interest petitions were filed before the apex court. The PILs had broadly asked for directions regarding allegations against the Adani Group.
During the hearings, the Supreme Court had voiced concern for investors when it was revealed that Adani Group's investors had lost a total of Rs 10 lakh crore after short-seller firm Hindenburg had made its report public.
On March 2, the Supreme Court had directed the Securities and Exchange Board of India to investigate whether there have been any disclosure failures and if there was any manipulation of Adani stock prices in contravention of existing laws.
The regulator was directed to submit its report within two months but on April 29, SEBI made submissions before the apex court asking for six months to conclude its investigation.
The Supreme Court had also set up an independent committee headed by Justice (retired) Abhay Manohar Sapre. Other members of the committee included OP Bhat, KV Kamath, Nandan Nilekani, Somashekhar Sundaresan, and retired Justice JP Devadhar.
The committee was directed to provide an overall assessment of the situation, including the causal factors which had led to volatility in the securities market in the recent past.
It was also asked to suggest measures to strengthen investor awareness, to investigate whether there has been regulatory failure in dealing with the alleged contravention of securities laws in the matter, and to suggest measures to strengthen the statutory and regulatory framework for the protection of the investors.
The committee had submitted its report earlier this week.
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