The Supreme Court on Wednesday gave the Securities and Exchange Board of India (SEBI) time till August 14 to complete its investigation into the Hindenburg-Adani Group allegations even as the market regulator clarified that the “investigation” referred to by Minister of State for Finance Pankaj Chaudhary in Parliament on July 19, 2021 concerns an October 2020 probe into “minimum public shareholding norms and consequential violations”, which is also admittedly a part of the US-based short-seller’s damning report against the Adani Group.

SEBI was responding to submissions made by petitioners in court that SEBI had been investigating Adani since 2016. Congress leader Jairam Ramesh had joined in with a tweet that the “Minister of State for Finance, Pankaj Chaudhary, told the Lok Sabha on July 19, 2021 that SEBI had been investigating the Adani Group. Now SEBI tells the Supreme Court that they have not been investigating any of the serious allegations against Adani!”

Adani versus Hindenburg: A perennial battle between the bulls and the bears  Adani versus Hindenburg: A perennial battle between the bulls and the bears  
2016 incidents

On Wednesday, Solicitor General Tushar Mehta, for SEBI, said the Minister was actually referring to an October 2020 “investigation”. He said SEBI had not begun any probe against Adani in 2016.

“The Minister, in his reply to the Parliament on July 19, 2021, confirmed that SEBI is investigating companies with regard to SEBI regulations. It may be noted that the ‘investigation’ referred to is with regard to non-compliance with minimum public shareholding (MPS) norms and consequential violations. This investigation commenced in October 2020. It was this investigation, commenced in October 2020, which the Minister referred to in the Parliament. It is confirmed that the investigation referred to by the Minister had not commenced in 2016,” Mehta submitted.

He said “one of the allegations made in the Hindenburg report was related to the non-compliance of minimum price shareholding norms and violations”. The SEBI was already investigating it. The court said the updated status report of SEBI should cover issues “directly related” with the Hindenburg report. “One of the aspects which will have a bearing on what is disclosed in the Hindenburg report is the non-compliance with MPS norms,” the Bench noted.

The Solicitor General said the 2016 “investigation”, brought up time and again, concerned an order of the SEBI regarding the issuance of Global Depository Receipts (GDRs) by 51 Indian listed companies. “No listed entity of this company (Adani) was part of the 51 companies,” he maintained.

“Though the SEBI had directed the freezing of Foreign Portfolio Investments (FPIs), including that of Albula Investment Fund Ltd, Cresta Fund Ltd and APMS Investment Fund Ltd as a consequence of its 2016 order, it is hereby clarified that this action is purely in consequence of the GDR matter and not related to any examination into ‘so and so’ company,” Mr. Mehta submitted.

“You just can’t pick up something in 2016 and 2020 and connect it with the allegations from the Hindenburg report… The 2016 issue was totally different, distinct and completely separate,” he said. “But the question is what has happened to all these investigations… SEBI must put everything on record,” Bhushan objected. Mehta said the petitioners cannot use the court proceedings to go on a “roving enquiry”.

The Bench observed that the ambit of the court proceedings was limited to the Hindenburg report. “The purpose of these proceedings is not for us or for a PIL petitioner to conduct a roving enquiry… On whatever is directly related to the Hindenburg report, the Solicitor General said he is filing an affidavit… What is now related to the Hindenburg report is about compliance with MPS norms,” Chief Justice Chandrachud addressed Bhushan.

The court told SEBI that it would not allow the market regulator an “indefinite extension of time”. However, at the same time, the court kept the door ajar for SEBI by remarking that “you tell us by August 14 what is the position, then we will see what is needed”.

On Wednesday, Ramesh, referring to the three-month extension given to SEBI, tweeted that only a Joint Parliamentary Committee would reveal the “whole truth” and the “SC-supervised investigation is limited to violations of securities laws”.