The Supreme Court on Monday adjourned the petition filed by the Securities and Exchange Board of India (SEBI), seeking six months time to probe the Hindenburg Research report and the allegations it levelled against the Adani Group of companies.

The matter was mentioned before the Bench led by Chief Justice of India (CJI) D.Y. Chandrachud, which agreed to list it for hearing tomorrow.

The market regulator filed a rejoinder affidavit in the Apex Court today, giving additional reasons for seeking more time to investigate the Hindenburg Research report.

Appearing for SEBI, Solicitor General Tushar Mehta said that it needed at least six more months to complete the probe, considering the complexities of the matter. 

The SG contended that the additional time would ensure the carriage of justice, as well as the interest of investors and the securities market since any incorrect or premature conclusion of the case arrived at without full facts material on record would not serve the ends of justice and hence, would be legally untenable.

The fresh affidavit filed by the market regulator further sought to substantiate its plea by highlighting the complexity of transactions referred to in the controversial report. 

It said in respect of the investigation or examination relating to 12 transactions referred to in the Hindenburg Report, prima facie it was noted that these transactions were highly complex and had many sub-transactions across numerous jurisdictions.

It further said that a rigorous investigation of these transactions would require collation of data/information from various sources, including bank statements from multiple domestic as well as international banks, apart from financial statements of onshore and offshore entities involved in the transactions and contracts and agreements, if any, entered between the entities along with other supporting documents. 

The SG said an analysis would then be conducted on the documents received from various sources before conclusive findings can be arrived at.

SEBI further termed as ‘factually baseless,’ the allegation made by the petitioner that it had been investigating the companies owned by Gautam Adani since 2016. It said the investigation pertaining to the issuance of Global Depository Receipts by 51 Indian listed companies did not include any listed company of Adani Group. 

The affidavit added that reliance sought to be placed on the investigation pertaining to GDRs was wholly misplaced. 

(Case title: Vishal Tiwari vs Union of India & Ors)

The Supreme Court on Friday directed the Securities and Exchange Board of India (SEBI) to complete its probe into the controversy surrounding the Hindenburg Research report on the Adani Group of companies and allegations against the Conglomerate within three months.

The Bench of Chief Justice of India D.Y. Chandrachud, Justice P.S. Narasimha and Justice J.B. Pardiwala passed the orders on a petition filed by the market regulator seeking an extension of six months to submit its probe report.

The Apex Court observed that it cannot grant SEBI six months now as there needed to be some alacrity in the work. 

Directing the market regulator to put together a team, the Apex Court said it would list the case in the mid of August for hearing. It said six months cannot be given as a minimum time, adding that SEBI cannot take an indefinitely long period.

The top court of the country further observed that it has received the probe report submitted by the court-appointed expert committee headed by retired apex court judge, Justice A.M. Sapre. 

Stating that it would look into the report over the weekend, the Bench said that it would pronounce its order on SEBI’s application for extension of time on May 15.

Earlier, the Supreme Court appointed six-member panel in the Adani-Hindenburg case had submitted its observations in a sealed cover before the Apex Court.

As per media reports, although it is clear that the committee has submitted its note, it is unclear whether the panel has completed its investigation or sought more time, according to media reports.

Its submission comes after the Securities and Exchange Board of India (Sebi) sought a six-month extension to complete its probe into the allegations of stock price manipulation by the Adani group and lapses in regulatory disclosure.

A petition had been filed in the Supreme Court opposing the extension of six months granted to the Securities and Exchange Board of India (SEBI) for completion of its probe into the allegations made by US-based short seller firm Hindenburg Research against Adani group of companies over stock price manipulation.

Filed by Vishal Tiwari, the petition sought directions for the market regulator to complete the investigation within the stipulated time and file a report before the Apex Court.

It urged the top court of the country not to extend the time granted originally to SEBI for completion of investigation into the Hindenburg report case.

Earlier on April 29, the market regulator had sought extension of six months to complete investigation into the controversy related to the Hindenburg Research report on Adani Group of companies and the allegations surrounding it.

As per SEBI, the 12 suspicious transactions cited in the Hindenburg report would need a rigorous probe since the complex transactions were having many sub-transactions.

Earlier on March 2, the Apex Court had directed the market regulator to finish the probe by May 2. This was in addition to the investigation ordered by the Apex Court, to be conducted by an expert committee headed by retired apex court judge, Justice AM Sapre.

SEBI submitted on April 29 that it would need another six months to complete the probe. It apprised the expert committee of the status, steps taken and interim findings in respect of the examinations and investigations carried out by it.

In its application, the market regulator submitted that the 12 suspicious transactions cited in the Hindenburg report would need a rigorous probe of at least 15 months since those transactions are complex and have many sub-transactions.

The probe would further require obtaining bank statements from multiple domestic as well as international banks and as the bank statements would also be for the transactions undertaken more than 10 years ago, this would take time and be challenging, noted the petition by SEBI.

It further said the process of seeking bank statements from the offshore banks would entail taking assistance from offshore regulators, which may be time consuming and challenging. However, the market regulator said it would try to complete the process in six months.

The market regulator listed three broad categories, under which the transactions requiring more time would fall:

(i) Those where prima facie violations have been found and a period of 6 months would be required to arrive at conclusive finding

(ii) Those where prima facie violations have not been found, a period of 6 months would be required to revalidate the analysis and arrive at conclusive finding

(iii) In cases where further examination/investigation is required and most of the data that is required for this purpose is expected to be reasonably accessible, a conclusive finding is expected to be arrived at in six months.

(Case title: Vishal Tiwari vs Union of India and ors)

The Supreme Court allowed on Wednesday a petition filed by the Central government, seeking allocation of Rs 5,000 crore out of Rs 24,000 crore deposited by the Sahara group with market regulator Sebi to repay more than 1.1 crore investors, who had put their life savings in four multi-state cooperative societies run by the Sahara Group.

The Bench of Justice M.R. Shah and Justice C.T. Ravikumar directed the Union government to disburse the amount to the depositors, who were duped by the Sahara group of cooperative societies.

It added that the entire process would be monitored by former Supreme Court judge, Justice R. Subhash Reddy.

The Union of India had filed an application on a petition by one Pinak Pani Mohanty, seeking directions to repay the depositors, who had invested in several chit fund companies and Sahara credit firms.

The application filed by the Central government sought money from the SEBI-Sahara Sahara-Sebi escrow account that was formed after the in August 2012 verdict of the Apex Court.

The top court of the country had directed in its judgment, two companies of Sahara Group, namely the Sahara India Real Estate Corporation Limited (SIRECL) and the Sahara Housing India Corporation Limited (SHICL), to refund the investors.

The Supreme Court on Friday said that it would pass orders to constitute an expert committee, which would review the regulatory mechanism and suggest ways to protect the investors from incidents such as the recent Hindenburg-Adani issue, which hit the Indian investors, as well as the share market, badly.

The Bench of Chief Justice of India D.Y. Chandrachud, Justice P.S. Narasimha and Justice J.B. Pardiwala made these observations after Solicitor General Tushar Mehta, appearing for the Central government, submitted the remit of the proposed committee and also its members. 

While refusing to accept the names recommended by the Centre, the Apex Court orally observed that the Judges would pick the Committee members themselves, in order to maintain full transparency and to have full (public) confidence in the committee. 

The top court of the country observed that if it took names from the government, it would amount to a government-constituted committee, adding that it cannot start with a presumption of regulatory failure.

The Bench said that it would not entertain suggestions from either the Centre or the petitioners regarding recommendation for the members of the committee. It also refused to accept the suggestions made by SEBI regarding members of the committee on the grounds that nobody would be allowed to question the committee or comment on the merits of its members.

The top court of the country further rejected the suggestion made by some petitioners to include a sitting Supreme Court judge in the committee to monitor.

SG Mehta requested that the remit of the committee should be defined in such a manner so as to not give an impression to foreign and domestic investors that there were inadequacies in the regulatory framework.

Keeping in with the suggestion, the Apex Court asked the petitioners in each case to present their viewpoints. 

On February 10, the Apex Court had directed both the Union government and the Securities Exchange Board of India (SEBI) to suggest measures regarding modification in the regulatory framework and for the protection of Indian investors.

The top court of the country is currently hearing three petitions related to the Hindenburg-Adani issue. 
The first petition was filed by Congress leader Jaya Thakur seeking investigation against the Adani Group over charges of share inflation by way of manipulations and malpractices, as alleged in a report published by US-based short-seller Hindenburg Research.
It further sought probe into the role of the Life Insurance Corporation of India (LIC) and the State Bank of India (SBI) for allegedly investing huge amount of public money in the FPO of Adani Enterprises at the rate of Rs 3200 per share when the prevailing market rate of the shares was around Rs 1800 per share in the secondary market.

Alleging that industrialist Gautam Adani and his associates had ‘swindled’ lakhs of crores of ‘public money,’ the petitioner sought probe by investigating agencies like CBI, ED, DRI, SEBI, RBI and SFIO under the supervision and monitoring of a sitting judge of the Supreme Court.

A PIL was filed by Vishal Tiwari seeking constitution of a committee under the chairmanship of a retired Supreme Court Judge to investigate the contents of the Hindenburg Research Report.

Another petition filed by Advocate M.L. Sharma sought to declare ‘short-selling’ as an offence of fraud. This plea urged the Apex Court to direct probe against Nathan Anderson, founder of Hindenburg, for ‘exploiting’ innocent investors via short selling under the ‘garb’ of artificial crashing.  

The Supreme Court on Thursday adjourned the matter related to Reliance Industries and the Securities & Exchange Board of India.

A Bench comprising Justice JK Maheshwari and Justice Hima Kohli passed the order on a petition filed by Reliance Industries against the Securities and Exchange Board of India over disclosure of shares.

As per the Counsel for the respondents, “This matter is pending in HC; submission is to be done either in session court or the HC. SEC 129 – No one is compelled to disclose to the court any confidential – as SEBI is regulator its legal processual advice cannot be compelled. My humble submission is to let the Bombay HC decide.”

“My submission is as the CA’s report says that there is no round tripping but SEBI’s own internal assessment says that on one single day, the funds came from an account and went to 38 different companies and again from those 38 companies the funds came back to that account.

“That’s why we are relying on SEBI report. But later on, settlement talks begin.

Under that settlement process, they asked for those documents which we don’t gave, so they went to Bombay HC,” he added.

The Court asked not to proceed for round tripping based on CA report but the SEBI wanted to Prosecute for round tripping. Under section 208 of CrPC the question of furnishing documents comes only after the process is issued and trial starts. And as per sec 91 of CrPC also we are not liable to produce documents before inquiry. And let the trial start and let it be decided by Bombay HC. They want legal opinion which was taken upon the report, but both the report and legal opinion cannot be disclosed under litigation privilege. But if we take a legal opinion from a judge and judge refers to expert opinion than that opinion is also considered as part of legal opinion, hence it can’t be disclosed. The allegation against the company was based upon a newspaper or whistle blower article stated that convertible debentures worth 900 crores have been transferred from the parent company

As per the Counsel for the respondent, the main allegation against us is that the money with us Round Tripping. The CA itself thoroughly audited the transaction and the money was not round tripping and SEBI wants to hold the report and prosecute us baselessly. The SEBI is the regulator who said they have conducted an investigation and went to take opinion; they are not the private party. They are supposed to examine fact and not create documents for litigation. Third, if technical breeches upon which we ready to settle with the fine.

In the initial disclosure, they had disclosed part of report (Justice retired shri krishna part 1) and one of the primary rules of privileges is if you disclose part of the report, you lose the privileges.