25-Nov-2023
2 mins read
In a significant turn of events surrounding the Adani-Hindenburg case, the Supreme Court of India has reserved its judgment, sparking anticipation regarding potential directives aimed at the Securities and Exchange Board of India (SEBI). The Chief Justice of India (CJI), DY Chandrachud, hinted at forthcoming orders to SEBI during the hearing, emphasizing the court’s intervention aimed at fortifying the regulatory framework to safeguard investor interests and prevent wealth erosion in such circumstances.
SEBI’s Investigation and Identified Cases
SEBI, represented by Solicitor General Tushar Mehta, disclosed critical insights during the proceedings. It was revealed that SEBI had identified 24 cases linked to the conglomerate under scrutiny. Notably, investigations into 22 cases have been concluded, showcasing progress in their probe. However, two cases await responses from foreign regulatory bodies, impeding the finalization of these investigations.
Court’s Scrutiny and SEBI’s Compliance
The court, referencing an application for contempt proceedings against SEBI filed earlier, underscored the necessity to address concerns surrounding the investigation’s progress. Mehta assured the court that SEBI would not seek an extension for the investigation into billionaire Gautam Adani’s group. Moreover, he acknowledged the court-appointed expert panel’s recommendations aimed at reinforcing the regulatory framework, expressing willingness to accommodate these suggestions despite potential constraints.
Implementation Challenges and Regulatory Authority
The Chief Justice queried the timeline for implementing these recommended changes and the authority responsible for their execution. Mehta highlighted the limitations faced by SEBI, indicating that while the suggestions align with the regulatory spirit, their implementation involves collaboration with the Central government due to rule-making authority resting with the latter.
Court’s Deliberations and Future Directions
Addressing objections raised by petitioners regarding the expert panel’s report, the CJI assured a comprehensive consideration of all submissions. Subsequent directions from the court are poised to reflect a balanced assessment of these submissions while aligning with the objective of fortifying the regulatory landscape.
Chronology of Events
The Adani-Hindenburg saga commenced when Hindenburg alleged stock manipulation and accounting fraud by the Adani conglomerate, vehemently denied by the group as a deliberate attack on India. In response to multiple PILs, the Supreme Court formed an expert panel in March 2023 to investigate and recommend enhancements to the regulatory framework. The court granted SEBI extensions, initially until May and later until August 14, to conclude its investigations, albeit shorter than the regulator’s initial request for six months.
Market Response
Interestingly, amidst these legal and regulatory developments, the market witnessed varied responses. Adani Enterprises experienced notable gains in Nifty stocks, showcasing investor sentiments. Adani Power, Adani Energy Solutions, Adani Green Energy, Adani Total Gas, NDTV, Adani Wilmar, and ACC observed varying degrees of fluctuations in their stock values, while Ambuja Cements saw a slight decline.
The culmination of these legal deliberations and regulatory actions is anticipated to not only address the specific case but also potentially shape the regulatory landscape, impacting investor confidence and market dynamics.