Adani-H'burg Case: SC Upholds SEBI's Jurisdiction, Says No Valid Ground Raised To Revoke Amendment

The Supreme Court of India upheld the Securities and Exchange Board of India's (SEBI) jurisdiction over the Adani-Hindenburg case, dismissing appeals to transfer the investigation to the Central Bureau of Investigation (CBI). The ruling, delivered by a bench comprising Chief Justice D Y Chandrachud and justices J B Pardiwala and Manoj Misra, clarified key points and directives that impact the ongoing probe.

Here are the essential takeaways from the judgment:

SEBI Retains Investigation Authority: Chief Justice DY Chandrachud emphasized that there were insufficient grounds to shift the Adani Hindenburg case investigation from SEBI to a Special Investigation Team (SIT). This decision solidifies SEBI's role as the primary investigator.

OCCPR Report Dismissed: The court disregarded the credibility of the OCCPR (the third-party organization behind the Hindenburg Report), stating that reliance on unverified third-party reports cannot be considered as conclusive proof. The judgment underscored the need for verified evidence in investigations.

SEBI's Progress Acknowledged: CJI Chandrachud highlighted SEBI's progress in concluding investigations in 20 out of 22 matters related to the case. The court directed SEBI to finalize the remaining two investigations within three months.

Caution Against External Reports: The Supreme Court cautioned against unquestioningly relying on newspaper reports or third-party organizations to challenge a statutory regulator like SEBI. Such reports were deemed admissible as inputs but not as conclusive evidence.

Call for Additional Investigations: The court instructed both the Centre and SEBI to probe whether the Hindenburg report on short selling breached any laws. They were directed to take necessary legal actions if any violations were identified. Additionally, SEBI was tasked with investigating any potential infractions by Hindenburg.

Following the verdict, the Adani Group witnessed a surge in stock prices, ranging from 3% to 18% during intraday trade on January 3. The market responded positively to the Supreme Court's decision regarding the investigation into alleged fraud outlined in the Hindenburg Research report.

The latest verdict reaffirms SEBI's investigative authority in the Adani-Hindenburg case while emphasizing the need for robust and verified evidence in such sensitive matters. The Court's directives signal a focused approach to conclude pending investigations and evaluate claims made in external reports within the framework of established legal procedures.