Adani Hindenburg case: Supreme Court to deliver verdict today

New Delhi: On Wednesday, the Supreme Court will make its verdict public on a series of pleas regarding accusations of accounting deceit and stock manipulation against Adani group companies. This follows a research report by Hindenburg Research, a US short-seller, published in January 2023. A six-member panel was formed by the Supreme Court on March 2, 2023, helmed by retired Supreme Court judge AM Sapre tasked to investigate a potential regulatory lapse by Sebi and an alleged violation of laws by Adani.

The judgment will be delivered by a bench made up of the Chief Justice of India, Dhananjaya Y Chandrachud, and justices JB Pardiwala and Manoj Misra. They will also decide needed actions for Securities and Exchange Board of India (Sebi) to curb aggressive market swings and to tighten the relevant rules for protecting investors. The resolution for this case was deferred until November 24 and now, according to the court's online published list of affairs, the Chief Justice will announce the verdict.

The Adani group, led by Gautam Adani, was accused of stark accounting fraud and stock falsification according to a report by Hindenburg Research, published in January 2023. The conglomerate dismissed the report, terming it as lacking research or "pitfall-ridden" and "calculatedly harmful". However, this led to the Adani group stocks taking a severe hit, losing over $140 billion in a matter of days, leading to a cancellation of a €20,000 crore share sale.

According to a report submitted by the panel in May, while the charges of stock price manipulation or violation of MPS rules against Adani companies couldn't be confirmed at that stage, certain concerns were raised related to the current Foreign Portfolio Investors regulations. The committee argued that the Sebi had earlier removed a restriction on FPIs having a "non-transparent structure" during 2018-2019, hence, Sebi's initial investigation into potential violation of MPS regulations by Adani using 13 international entities had yielded no results.

On November 24, the court clarified that it would not be appropriate to appoint an SIT to investigate the alleged violations of MPS standards by Adani companies unless there's proof of lapses on Sebi's part, which is already investigating the matter. The court declined to order an investigation based solely on media reports, noting that it's not expected of a statutory regulator like Sebi to start issuing notices based on reports from Hindenburg or news organizations like Financial Times. They also mentioned that they cannot take any action before hearing all the parties affected by the proposed judgment.