The Supreme Court on Friday (24th November) reserved its judgment pertaining to public interest litigations (PILs) seeking a Court-monitored investigation into allegations made against the Adani group by US-based short-selling firm Hindenburg Research. The apex court remarked that it is easy to make allegations against anyone, adding that petitioners should show some responsibility while levelling charges against any party.
A bench of Chief Justice of India DY Chandrachud, justices JB Pardiwala and Manoj Misra are hearing the petitions seeking a probe in Adani based on the Hindenburg report. The court also criticised the petitioners for questioning the impartiality of the members of the court-appointed expert committee.
When Bhushan referred to reports published by The Guardian and Financial Times alleging that SEBI had not undertaken a proper investigation in the case, CJI said, “Mr Bhushan, I don’t think you can take something written in a newspaper, whether Guardian or Financial Times, to be gospel truth.”
The SC bench, headed by Chief Justice of India (CJI) DY Chandrachud, rubbished allegations against the SEBI – which is investigating the allegations against Adani — saying that a financial regulator cannot be asked to take something printed in the paper.
“SEBI is a statutory body exclusively entrusted with investigating stock market manipulation. Is it proper for a court without any proper material to say that we don’t trust SEBI and we will form our own SIT? This has to be done with much calibration,” CJI told Advocate Prashant Bhushan.
Appearing for petitioner Anamika Jaiswal, Advocate Prashant Bhushan argued that SEBI’s conduct in the matter was not credible. To this, the CJI responded by saying, “Mr. Bhushan, I do not think you can ask a financial regulator to take something printed in the newspaper.. This does not discredit SEBI.. Should SEBI now follow journalists?”
The court further told the court that it is easy to make allegations and one must be also very careful.
Bhushan also referred to “factual revelations” in the Hindenburg report to which the CJI replied that the Court could not proceed on the assumption that the report was true. “We don’t have to accept the Hindenburg report as ipso facto factually correct. That is why we asked SEBI to investigate…” CJI said.
Bhushan also referred to allegations of conflict of interest made by the petitioner against some expert committee members. He pointed out that OP Bhatt is a chairman of Greenko which has a close partnership with the Adani group. Prashant Bhushan also said that one of the members of the expert committee Somashekhar Sundaresan was a lawyer lawyer representing Adani in various forums including in the SEBI Board.
The CJI dismissed the charge saying that lawyers make appearances in various cases, adding that Sundaresan appeared for Adani 17 years ago and this can’t disqualify him from the committee. “And you cite an appearance made by him (Somasekharan) 17 years ago! There has to be some responsibility about the allegations you make,” the CJI said.
CJI DY Chandrachud further said that if this logic is followed, no lawyer who has appeared for an accused should become a High Court judge.
The court came down heavily on a petition by Congress leader Jaya Thakur seeking enquiry against the State Bank Of India (SBI) and Life Insurance Corporation (LIC) for investments into the Adani group.
The CJI said, “Is this some debate in a college? You are before a court. You realise the consequence of a direction against SBI and LIC? Absolutely no material by you and you are alleging this. Surely there must be some responsibility.”
Meanwhile, the CJI told SEBI that it must take steps to protect the stock market from volatility caused by short-selling and similar instances. The court said that it had intervened in the matter due to the extreme volatility of the stock market and sought to know what is SEBI planning to do for such kind of volatility and planning to protect investors in cases like short selling.
When asked by the apex court what steps SEBI is taking in this direction, Solicitor General Tushar Mehta said that these are larger issues which SEBI is considering. In terms of the recommendations made by the expert committee, the SG said that SEBI will make room for changes where possible.
He informed the court that the agency is not seeking any extension of time for the ongoing investigation into the Adani-Hindenburg case. “There were 24 cases identified for investigation of which 22 have been completed,” the SG submitted. For the remaining two cases, the agency said that it needs information from foreign regulators.
SG Tushar Mehta also took the court through the recommendations of the Expert Committee which SEBI has agreed with in principle.
He said that there is a growing tendency to plant stories outside India to influence decisions within India, urging the Supreme Court to stop such allegations.
In January this year, Hindenburg Research accused the Adani Group of fraud and stock price manipulation. The charges were denied by Gautam Adani who claimed in July that no regulatory failure was found by the expert committee which was constituted by the Supreme Court.
