Allegation That SEBI Is Investigating Adani Group Since 2016 Is Factually Baseless: SEBI To Supreme Court

The Securities and Exchange Board of India has told the Supreme Court that the allegation that it has been investigating Adani since 2016 is factually baseless.

Though the pleas pertaining to the Adani-Hindenburg row were listed today before the Bench headed by Chief Justice DY Chandrachud, they were not heard due to paucity of time. When a plea was mentioned on behalf of the Petitioner, the Court said that it will only be taken up after the summer vacation which ends on July 2.

In a rejoinder affidavit filed before the Apex Court, the SEBI has stated that the investigation pertained to the issuance of Global Depository Receipts (“GDRs”) by 51 Indian listed companies. It added, however, no listed company of Adani Group was part of the aforesaid 51 companies.

“…the allegation that Securities and Exchange Board of India (“SEBI”) is investigating Adani since 2016 is factually baseless. I, therefore, say and submit that reliance sought to be placed on the investigation pertaining to GDRs is wholly misplaced”, the affidavit by SEBI read.

The Securities and Exchange Board of India (SEBI) had moved an application in the Apex Court seeking six more months for ascertaining possible violations related to misrepresentation of financials, circumvention of regulations, and/or fraudulent nature of transactions, and completing the exercise.

The Apex Court had on March 2 asked SEBI to probe the matter within two months and also set up a panel to look into the protection of Indian investors after a damning report by a US short seller wiped out more than USD 140 billion of the conglomerate's market value. The Court also constituted an Expert Committee for the assessment of the extant regulatory framework and for making recommendations to strengthen it.

SEBI in a fresh affidavit submitted that the application for extension of time filed by SEBI is meant to ensure carriage of justice keeping in mind the interest of investors and the securities market since any incorrect or premature conclusion of the case arrived at without full facts material on record would not serve the ends of justice.

“…in respect of the investigation/examination relating to 12 transactions referred to in the Hindenburg Report, prima facie it is noted that these transactions are highly complex and have many sub transactions across numerous jurisdictions and a rigorous investigation of these transactions would require collation of data/information from various sources including bank statements from multiple domestic as well as international banks, financial statements of onshore and offshore entities involved in the transactions and contracts and agreements, if any, entered between the entities along with other supporting documents. Thereafter, analysis would have to be conducted on the documents received from various sources before conclusive findings can be arrived at.”, SEBI said.

SEBI has further informed the Court that in the context of the investigation into Minimum Public Shareholding (“MPS”) norms, it has approached eleven overseas Regulators under the Multilateral Memorandum of Understanding with International Organization of Securities Commissions.

“…in the context of investigation into Minimum Public Shareholding (“MPS”) norms, SEBI has already approached eleven overseas Regulators under the Multilateral Memorandum of Understanding (“MMOU”) with International Organization of Securities Commissions (“IOSCO”). Various requests for information were made to these Regulators. The first request to overseas Regulators was made as early as on October 6, 2020.”, the affidavit by SEBI reads.

Earlier, One of the PIL petitioners had moved the Supreme Court opposing SEBI's plea seeking a six-month extension to complete the probe into allegations of stock price manipulation by the Adani group and lapses in regulatory disclosure, saying the market regulator has already got sufficient time to inspect, examine, collect and seize relevant documents.

Cause Title- Vishal Tiwari v. Union of India & Ors.

Click here to read/download Affidavit