Can't give indefinite extension, submit report on Adani-Hindenburg probe by Aug 14, SC to SEBI

The Supreme Court on Wednesday asked market regulator SEBI to submit an updated status report on August 14 on its probe into the Adani-Hindenburg controversy, while also directing that the copies of the report of the Justice A. M. Sapre panel will be given to the parties in the meantime to enable them assist in further deliberations.

A bench headed by Chief Justice of India D.Y. Chandrachud told Solicitor General Tushar Mehta, representing SEBI, that the court could have given time till end of September but on August 14, "tell us, what stage you are on... Give us an updated report".

Mehta contended that 6-months extension for the SEBI to complete its report was already compressed.

The bench, also comprising Justices P.S. Narasimha and J.B. Pardiwala, told Mehta that "tell us what you have done and the court had initially granted 2 months and now extended it till August which makes it 5 months" as it stressed that it cannot give indefinite extension for completing the probe.

Advocate Prashant Bhushan submitted that in recent years, despite many complaints, SEBI did not do anything.

The SEBI had told the Supreme Court that allegations that it has been investigating the Adani Group since 2016 are "factually baseless". It also cautioned that "any incorrect or premature conclusion of the case arrived at without full facts material on record would not serve the ends of justice and hence would be legally untenable".

It, in a written response in the top court filed on May 17, said that Minister of State for Finance in his reply to the Parliament on July 19, 2021 had confirmed that SEBI is investigating some Adani Group companies with regard to compliance with SEBI Regulations.

"It may be noted that the investigation referred to was in respect of possible non-compliance with Minimum Public Shareholding (MPS) Norms, and consequential violations.

"This investigation had commenced in October 2020. It is hereby confirmed that the investigation referred to by the Hon'ble Minister had not commenced in 2016.

"SEBI has made a statement to this Hon'ble Court that it is examining/investigating the allegations made in the Hindenburg Report. One of these allegations was related to non-compliance with MPS norms.

"SEBI has also submitted to this Hon'ble Court that the current status of this Investigation has been submitted to the Expert Committee constituted by this Hon'ble Court."

It said it has also submitted to the apex court that in the context of investigation into MPS norms, SEBI has already approached eleven overseas Regulators under the Multilateral Memorandum of Understanding ('MMOU') with International Organisation of Securities Commissions (IOSCO). Various requests for information were made to these Regulators, it added.

"The first request to overseas Regulators was made as early as on October 6, 2020... it is this investigation that had commenced in October 2020 that was referred to by the Hon'ble Minister of State for Finance in his reply to the Parliament," said SEBI, in its written response.

The SEBI said it is understanding that the root cause of the erroneous linkage of a 2016 matter to the Adani Group is as follows: "In 2016, SEBI passed an order pertaining to the issuance of Global Depository Receipts (GDRs) by 51 Indian listed companies. No listed company of Adani Group was part of the aforesaid list of 51 companies, which has been specifically stated in our rejoinder dated May 15, 2023 to the Hon'ble Supreme Court. However, there were some FPIs including Cresta Fund Ltd, Albula Fund Ltd and APMS Fund Ltd, the GDR relevant accounts of which, were frozen as a consequence of the 2016 order. It is hereby clarified that this action was purely a consequence of the GDR matter and not related to any examination into any Adani Group company."

The top court, in its order passed on Wednesday, said: "The Expert Committee is requested to continue to assist the Court. The Committee may hold further deliberations in the meantime. The Committee would be requested to take up any further aspects or suggestions as may be formulated by the Court, following the course of deliberations when the proceedings are next listed for hearing.

"Copies of the report of the Expert Committee shall be made available to the parties and their counsel to enable them to assist the Court in the course of further deliberations. The Registry shall take up steps accordingly. SEBI is granted an extension of time till 14 August 2023 to submit its report."