Adani row: SEBI can't investigate based on media reports, no material to doubt SEBI, says CJI

Hindenburg in January accused the Ahmedabad-based ports-to-power conglomerate of “brazen stock manipulation and accounting fraud”

The Chief Justice of India (CJI) DY Chandrachud on November 24 told the lawyers appearing in the batch of petitions pertaining to the Adani-Hindenburg row that the Securities Exchange Board of India (SEBI), cannot be asked to investigate something based on media reports.

CJI also noted that there is no material on record to doubt the credibility of SEBI's investigation on the issue.

The CJI while clarifying that he is not discrediting the authenticity of any media outlet, noted that media reports are not amenable to scrutiny like SEBI's investigations are. The CJI's observation came in the light of lawyer Prashant Bhushan alleging that SEBI did not act on incriminating news on Adani published by certain media outlets. Bhushan also alleged that if media outlets could gain access to documents against the conglomerate, SEBI could easily have done so.

Chandrachud also warned the lawyers appearing for the petitioner to be responsible and make reasonable requests to the court in cases like this only when they have evidence. He said "As lawyers, you should be responsible with what you’re asking. This is not some school debate. You are asking the Supreme Court to order an investigation against SBI and LIC without a shred of evidence? Do you know what the consequences are?"

Bhushan had also made allegations of conflict of interest against certain members of the Supreme Court-appointed panel to look into the issue. He made specific allegations against lawyer Somasekhar Sundarasan stating that he had appeared for Adani against SEBI in 2006. Responding to this, CJI said, "Let’s be fair. He was appearing as a lawyer. You’re pointing out a conflict of interest because he appeared for Adani in 2006? There has to be a sense of responsibility."

Sundaresan was appointed as a judge of the Bombay High Court on November 23. CJI further noted that SEBI did not choose the members of the SC's expert committee and said, "This is very unfair to the committee. If this goes on people will not work in committees appointed by us."

While Bhushan sought to rely on the Organized Crime and Corruption Reporting Project (OCCRP) report on Adani, Solicitor General Tushar Mehta, who appeared for SEBI told the court that OCCRP Bhushan had himself sent the report to OCCRP and is now appearing in the case.

He said, "We wrote to OCCRP asking for details. They asked us to get details from Prashant Bhushan. He gets a report prepared and then appears in the same case. Did not say this earlier because it would be embarrassing for Bhushan."

The SC has now reserved the case for judgment. 

Hindenburg in January accused the Ahmedabad-based ports-to-power conglomerate of “brazen stock manipulation and accounting fraud”, allegations that the Adani Group has vehemently denied, calling the report “a calculated attack on India”.

After receiving a flurry of PILs on the issue, SC in March 2023, formulated an expert panel to look into the issue and also come up with suggestions to enhance the existing regulatory framework. SC gave SEBI time till May to complete the investigation into the allegations.

In May, the apex court granted Sebi an extension until August 14 to conclude its investigation. The extension was, however, shorter than the six months time sought by the markets regulator to complete the investigation.