The Supreme Court of India on Monday dismissed an application seeking directions to the Securities and Exchange Board of India (SEBI) to submit its conclusive investigation report into allegations of stock manipulation against the Adani Group, as raised by US-based Hindenburg Research. The court upheld its registrar’s August 2024 decision to reject the plea, reaffirming confidence in SEBI’s ongoing probe.
Background
In January 2023, Hindenburg Research accused the Adani Group of stock manipulation and financial misconduct, triggering a massive sell-off of Adani stocks and eroding investor confidence. The Supreme Court responded by forming a six-member committee, led by former Justice A.M. Sapre, to review regulatory safeguards. The committee’s March 2023 report found no conclusive evidence of regulatory failure by SEBI but recommended measures to strengthen investor protections.
The court had earlier declined to transfer the probe to a special investigation team, stating that SEBI’s investigation was “comprehensive and competent.”
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Recent Plea and Registrar’s Rejection
Advocate Vishal Tiwari, a petitioner in the original case, filed a fresh application in August 2024 after Hindenburg released new allegations. These included claims of a “conflict of interest” involving SEBI Chairperson Madhabi Puri Buch and her husband’s alleged ties to offshore funds linked to Adani’s brother, Vinod Adani. Tiwari sought a directive for SEBI to submit its final report and conclude the investigation within a strict timeline.
However, the Supreme Court’s registrar rejected the application on August 5, 2024, stating it was “misconceived.” The registrar noted the court’s January 2024 order did not set a fixed deadline but only urged SEBI to complete the probe “expeditiously, preferably within three months.”
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“The judgment did not lay down a definite timeline for SEBI’s investigations. Directions for compliance are baseless without explicit orders,” the registrar observed.
During Monday’s hearing, the Supreme Court acknowledged SEBI’s progress, revealing that 20 of 22 matters under investigation had been resolved. The remaining two were directed to be concluded within three months. The bench dismissed Tiwari’s plea, emphasizing that third-party reports like Hindenburg’s could not be treated as evidence.
“SEBI’s investigation is proceeding satisfactorily. There is no deliberate inaction or infirmity in the process,” the court stated, reiterating its trust in the regulator.
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Controversy Around SEBI Chairperson
Hindenburg’s August 2023 report accused Madhabi Puri Buch of conflicts of interest, claiming she and her husband held stakes in offshore entities linked to Adani. Buch denied the allegations, calling them “baseless and defamatory.” The Finance Ministry later advertised for a new SEBI chairperson, signaling the end of her tenure amid the controversy.
The Supreme Court’s dismissal reinforces SEBI’s autonomy in handling complex financial investigations. By refusing to interfere, the judiciary has underscored the importance of allowing regulatory bodies to function without undue pressure.
“Courts must refrain from substituting their wisdom for that of market regulators. SEBI’s ongoing efforts inspire confidence, and third-party allegations cannot derail due process.”
Investors and legal experts view this as a precedent-setting decision, balancing judicial oversight with regulatory independence. While the Adani Group continues to deny all allegations, the spotlight remains on SEBI to conclude its probe transparently.
