Supreme Court on Wednesday said no valid grounds were raised that necessitated the transfer of the SEBI probe to an SIT in the Hindenburg Research allegations of stock price manipulation by the Adani group of companies. There were no grounds to doubt the market regulator’s probe, the court said.
The bench, led by Chief Justice of India DY Chandrachud, said there was no regulatory failure on SEBI’s part and the market regulator cannot be expected to carry on with its work based on press reports.
The top court clarified, “Investigative reports by press can act as inputs for SEBI but cannot be taken as credible evidence or a proof of regulatory failure by SEBI and it cannot cast doubt on the investigation being carried on by a statutory body.”
The Supreme Court acknowledged that though it had a right to transfer a probe to authorities like the CBI it should be done “sparingly” and that too only after it has been proved that the investigative agency acted in a biased manner.
In the present case, the court said there were no grounds to doubt SEBI and no reason to transfer the probe. Such a plea can only be raised if there is a wilful or deliberate violation of rules, the Court added. The bench further noted that SEBI had completed its probe in 22/24 cases. The bench also noted the assurance given by Solicitor General Tushar Mehta that the probe was nearing its conclusion and directed SEBI to complete its investigation in the pending cases within three months.
The bench, which also comprised Justices JB Pardiwala and Manoj Mishra, found merit in SEBI’s arguments and concluded that there was no reason to interfere in its delegatory legislative powers. The court will not ordinarily supplant this role, the bench said.
The top court further observed there were no infirmities with the Foreign Portfolio Investors (FPI) and Listing Obligations and Disclosure Requirements (LODR) regulations and no valid grounds were raised to direct the market regulator to withdraw its amendments on the same.
The top court’s verdict comes a year after the Hindenburg research made its report public on January 24.
In March 2023, the top court directed SEBI to probe the Hindenburg Report allegations against the Adani Group of companies. The apex court had also constituted a six-member committee to investigate and suggest remedial measures, if any, in the existing regulatory framework.
The six-member committee was led by ex-Supreme Court judge AM Sapre and comprised ex-chief of the New Development Bank of BRICS countries KV Kamath, ex-SBI chairman OP Bhatt, Infosys co-founder Nandan Nilekani, advocate Somasekhar Sundaresan and ex-High-Court judge JP Devadhar.