Adani-Hindenburg case: Easy to make allegations, can’t take unsubstantiated ones, remarks SC

New Delhi [India]: Hearing the Adani-Hindenburg matter, the Supreme Court on Friday remarked that it is easy to make allegations against anyone and opined the petitioners to show some responsibility while levelling charges against any party.

A bench of Chief Justice of India DY Chandrachud, also comprising justices JB Pardiwala and Manoj Misra passed the remarks when one of the petitioners raised questions over members of the expert committee.

Advocate Prashant Bhushan, appearing for one of the petitioners, told the court about one of the members of the expert committee Somashekhar Sundaresan, noting that he has been a lawyer representing Adani in various forums including in the SEBI Board.

CJI DY Chandrachud raised an objection to the petitioner’s submission and remarked that if one goes with the theory that a lawyer who appeared 17 years ago can now not be appointed to the committee and like this, no lawyer who has appeared for an accused should become a High Court judge.

CJI DY Chandrachud remarked that he is not an in-house counsel he was a lawyer and he appeared in 2006 and this conflict arose 17 years later. There has to be some responsibility for the allegations being levelled, SC remarked.

During the hearing, the court also remarked that it is easy to make allegations and one must be also very careful.
“We are not giving a character certificate to anyone,” SC noted.

When the hearing commenced today, Solicitor General Tushar Mehta told the top court that SEBI is not seeking an extension of further investigation matters relating to the Hindenburg report.

Out of 24 cases in the Adani-Hindenburg matter, investigations in 22 cases are over

For the remaining two cases, they need information from foreign regulators and others and they have been in consultation with them, SG Mehta informed the court.

The court then 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.

SG Tushar Mehta took the court through the recommendations of the Expert Committee which SEBI has agreed with in principle.
Advocate Prashant Bhushan, appearing for the petitioner, told the SC that there were many factual revelations in the Hindenburg report. He raised doubts about SEBI’s role in the matter and says a lot of information was available to it in 2014.

Bhushan informed the SC about a letter written in 2014 by the Directorate of Revenue Intelligence regarding substantial money siphoned to Mauritius. SG Mehta questioned Bhushan over this and said that DRI concluded the proceedings in 2017.

The court remarked that to advocate Bhushan, appearing for the petitioner, it is easy to make allegations and one must be also very careful.
SG Tushar Mehta urged the top court to stop these kinds of allegations.

The court remarked that SEBI, a statutory body looks into stock market frauds. SG Tushar Mehta said that there is a growing tendency to plant stories outside India to influence decisions within India.

After hearing the matter in length, the court reserved the order on various aspects related to the issue.

Earlier, the Securities and Exchange Board of India (SEBI) filed a status report before the Supreme Court apprising it that out of 24 investigations arising out of the Hindenburg report, 22 are final in nature and 2 are interim in nature.
The investigation was carried out in compliance with the directions of the top court’s order dated March 2, 2023, SEBI has investigated 24 matters.

In the mid of May, the top court gave three months more time to the Securities and Exchange Board of India (SEBI) to conduct a probe into the Hindenburg report SEBI was granted time till 14th August 2023 to conduct the probe.

On March 2, the apex court directed the capital market regulator SEBI to investigate any violations of securities law by the Adani Group in the wake of the Hindenburg report, which led to a massive wipeout of more than USD140 billion of the Adani Group’s market value.

Supreme Court, on March 2, set up an expert committee on the issue arising from the Hindenburg Research report on Adani Group companies. The committee will consist of six members, headed by former apex court judge Justice AM Sapre.
The top court had then asked SEBI to file a status report within two months.

The apex court was then hearing petitions pertaining to the Hindenburg report, including the constitution of a committee relating to regulatory mechanisms to protect investors’ interests.

The January 24 Hindenburg report alleged stock manipulation and fraud by the conglomerate.

The Adani Group has attacked Hindenburg as “an unethical short seller”, stating that the report by the New York-based entity was “nothing but a lie”. A short-seller in the securities market books gains from the subsequent reduction in the prices of shares.