SC Backs SEBI In Adani Case: Does This Move Justify The Work Done Earlier By The Apex Regulator In The Adani-Hindenburg Matter?

Whether right or wrong, pointing to opposition and finding fault in their every activity is the favourite blame game in Indian politics. Recently, Congress MP Manish Tewari criticised the work of SEBI on the Adani case and its lackadaisical attitude in such a sensitive matter that it triggered anger waves not only in the whole country but also in the parliament. Mr Tewari questioned the delay in the probe done by SEBI and has alleged that if SEBI wanted, the probe could have been completed long ago, and the matter would not stretched till a year. 

If you have even a little knowledge about the economy of the country, then the Adani-Hindenburg matter is no new topic for you. Everything was going gala for the Adani Empire till the point when the sharp arrow of Hindenburg busted the splendid conglomerate with allegations of fraud and financial accounting against the Adani. The great empire lost its valuation to nearly half, and shocking waves started moving all over the country regarding the immoral act of the great business tycoon. Along with that, his friendship with the country’s head, Mr. PM, also drew negative attention.

Approximately after one year, now the apex court of the country, the Supreme Court, has given some relief to the Adani group and has backed the SEBI Inquiry into Adani, rejecting any other.

Let’s try to decode whether the support that SC has given to SEBI works in parallel with what work SEBI has done earlier in the great ADANI case.

We believe that the directions of the Supreme Court will serve in the country’s favour; however, whether this move goes in cognisance with what happened earlier is also a matter of concern, pointing out a number of questions in a common man’s mind.

Question 1: SEBI’s efforts inspire confidence?

The Supreme Court said the SEBI was conducting a “comprehensive investigation” that “inspires confidence”. However, the directions of the honourable Supreme Court may not be acceptable to everyone, not because there are oppositions, but because saying the SEBI’s investigation ‘inspires confidence’ doesn’t go with the flow of work done by SEBI earlier. Last year, SC ordered SEBI to complete the investigation by 14.08.2023, which was later extended to 3 months and now to 03.04.2024 after SEBI demanded an extension. This somehow justifies the allegations made by Mr Tewari, acknowledging the incompetency of the apex regulator in conducting a thorough investigation in such a sensitive manner. 

Question 2: SEBI’s efforts do not suffer from any Infirmities?

A bench involving Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra mentioned that the matter does not warrant a transfer of the probe from the apex regulator to an SIT or CBI, as such powers need to be exercised sparingly. The honourable judges witnessed that SEBI’s investigation did not have any infirmities. However, a series of exposes from credible news sources last year about the ownership of 13 benami shell companies and over-invoicing coal imported by the Adani group has turned the glare of Adani’s illicit activities conducted under SEBI’s benign gaze. 

These two exposures by independent bodies and renowned media houses and create a sense of fishiness in Adani group’s activities, violating SEBI rules relating to minimum ownership and stock manipulation. So, how SEBI’s work does not suffer from infirmities raises doubt. However, the Court is right to observe that news reports are not a substitute for a proper SEBI investigation. However, SEBI’s continued demand for an extension of the deadline points towards some discrepancies in its work.

Question 3: The apex court asserted that the power of transfer of probe is subject to be exercised in extraordinary situations when the competent authority, here SEBI, displays glaring, willful, and deliberate inaction in doing the investigation. Since the SC finds confidence in SEBI’s action in the Adani case, transferring the case to any other investigating body is unnecessary.

However, there are ample cases where SEBI has failed to take timely action against companies that violate regulations, or their deliberate inaction has led to a severe financial crisis. The IL&FS crisis is a true example of this. IL&FS, a large infrastructure financing organisation, faced financial troubles for several years before it eventually collapsed in 2018. SEBI had been aware of these financial irregularities at the company but failed to take timely action, which resulted in a systemic crisis in the financial sector. This is just one example; there are many more like this. Does this attempt of SEBI not point out the ‘glaring, willful and deliberate inaction’ work attitude of SEBI?

The last call of action.

SEBI has earlier directed that the delay in the investigation was incurred during the challenges faced in investigating overseas transportation. There is no doubt that finding things in the book of such a grand conglomerate and its transaction is not such an easy thing.

But does it take one year for the apex regulatory body of one of the biggest democracies of the world, which is now titled to be as विश्व गुरु, to complete investigation in such a super sensitive matter that does not involve only the finances of retail investors but also the emotions and funds of a common person? All these statements somehow justify the question asked by Mr Tewari that if SEBI wanted, it could have completed the investigation. However, such a delay in such a complicated and sensitive case is unacceptable in such a developing economy! 

We believe that SC will do justice to everyone in the nation, and if found guilty, the one responsible will be punished and will not be forgiven just on the pretext of having a close ally with the head of the nation!