In two separate orders passed on Thursday, the Securities and Exchange Board of India (SEBI) has disposed off proceedings against Adani Group firms -- Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone, and Adicorp Enterprises -- along with those against Gautam Adani, Rajesh Adani and Jugeshinder Singh among others in matters related to allegations made by Hindenburg Research.
The capital market regulator said that a detailed probe found no violations with respect to related party transactions (RPTs) by the listed entities and the individuals and hence the proceedings have been disposed without any direction.
"Accordingly, having considered the matter holistically, I find that the allegations made against Noticees in the SCN are not established. Considering the above, the question of devolvement of any liability on Noticees does not arise and hence the question of determination of quantum of penalty also does not require any deliberation. I, therefore,... hereby dispose of the instant proceedings against Noticees without any direction," stated one of the orders passed by whole time member Kamlesh Varshney.
In one of the matters, the capital market watchdog was probing the allegation made by Hindenburg that Adani Enterprises and Adani Power Mundra (now merged with Adani Power Ltd) were funded by Milestone Tradelinks and Rehvar Infrastructure through Adani Infra (India) in FY 2020-21. The US-based short seller questioned the original source of funds of Milestone Tradelinks and Rehvar Infrastructure.
Hindenburg, in a report published in January 2024, alleged that Adicorp Enterprises, Milestone Tradelinks, and Rehvar Infrastructure were used as conduit entities to route funds from various Adani group companies to fund publicly listed companies namely, Adani Power and Adani Enterprises.
According to the SEBI order, the regulator carried out a detailed investigation in the matter to ascertain any possible material misrepresentation or misstatement in the financial statements, attempt to circumvent provisions of the SEBI Act, 1992, SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 or any other rules or regulations.
Meanwhile, the SEBI investigation revealed that Adani Ports & Special Economic Zone transferred funds as loan to Adicorp Enterprises, which in turn transferred funds as loans to Adani Power. Subsequently, Adani Power repaid the loans to Adicorp Enterprises along with with interest, which in turn, repaid the loans to Adani Ports & Special Economic Zone with interest.
In another case, Adani Ports & Special Economic Zone transferred funds as loans to Milestone Tradelinks and Rehvar Infrastructure, which in turn transferred funds to Adani Power and Adani Enterprises as loans. Subsequently, Adani Power and Adani Enterprises repaid the amounts to Milestone Tradelinks and Rehvar Infrastructure, along with with interest, which in turn repaid the amounts to Adani Ports & Special Economic Zone with interest.
Thus loans were given and repaid with interest in various tranches during the investigation period, found the SEBI probe.
It was further alleged by the US short seller that Adani Ports & Special Economic Zone, Adani Power and Adani Enterprises structured the transactions to conceal the actual related party transactions by routing funds through Adicorp Enterprises, Milestone Tradelinks and Rehvar Infrastructure thereby circumventing the related party provisions under the then Listing agreement and/or SEBI (LODR) Regulations. Incidentally, violation of PFUTP provisions were also alleged by Hindenburg.
SEBI investigation, however, revealed that there was no violation of Listing Agreement or SEBI (LODR) Regulations as the regulator is of the view that the impugned transactions do not qualify as “related party transactions”.
"Plain reading of the LODR Regulations reveals that transactions between a listed company with unrelated party is not covered within the definition of “related party transactions” as it existed during the time when impugned transactions took place," stated the SEBI order.
"Expert Committee, appointed by Hon’ble Supreme Court in Vishal Tiwari case, also held that the deferred prospective amendment of 2021 to the SEBI(LODR) Regulations makes it clear that the impugned transactions were not included within the scope of “related party transaction” for the period before the amendment," it added.
The SEBI order further stated that there is no violation of Section 12A of the SEBI Act and SEBI (PFUTP) Regulations as well.
"The main allegation of violation of Section 12A of the SEBI Act and SEBI (PFUTP) Regulations in the SCN (show cause notice) flows from non-classification of impugned transactions as “related party transaction”. Once it is held that there is no violation on that account, the charge under Section 12A of the SEBI Act and SEBI(PFUTP) Regulations do not stand," it said.
"On merit too, it is held that impugned transactions cannot be classified as manipulative or fraudulent transactions or unfair trade practice since: (i) there is no allegation of siphoning off of money or diversion of fund; (ii) all the money has come back with interest before the start of the investigation; and (iii) the impugned transactions have not been held as related party transactions," explained the SEBI order.
Once, it is held that there is no violation of above two main issues, it logically leads to conclusion that there is no violation of all other related violations alleged against the Noticees, which relates to non-disclosure/approval of the related party transactions, added the order.
Settlement applications withdrawn
Interestingly, the entities (Adani Group firms, individuals) had earlier filed settlement applications on various dates in March 2024 but subsequently withdrew their settlement applications on various dates in June 2025 and accordingly the case was then considered for issuance of the final order.
"It was noted that in terms of sub-regulation (1) of regulation 8 of the SEBI (Settlement Proceedings) Regulations, 2018, the filing of an application for settlement of any specified proceedings did not affect the continuance of the proceedings save the passing of the final order which was required to be kept in abeyance till the disposal of settlement application. Accordingly, hearings were completed but issuance of the final order was kept in abeyance till the disposal of settlement applications," stated the SEBI order.
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