Can't accept Hindenburg report on Adani Group as ipso facto correct: SC

The bench led by Chief Justice of India D Y Chandrachud said that it cannot doubt a statutory body like Sebi, by asking it to initiate further probe based on media reports.

New Delhi: The Supreme Court on Friday said it cannot accept Hindenburg report on Adani Group of companies as ipso facto true state of affairs, while emphasising that it found no material to doubt the Sebi probe and impartiality of expert committee appointed by it.

The court said it cannot doubt a statutory body like Sebi, by asking it to initiate further probe based on media reports. A bench led by Chief Justice of India D Y Chandrachud also took exception to allegations of conflict of interest made against members of expert panel headed by former top court judge Justice Abhay Manohar Sapre set up by the top court in March, this year to probe violations of statutory rules following the Adani-Hindenburg controversy.

Advocate Prashant Bhushan, appearing for an intervenor, raised allegations against advocate Somasekhar Sundaresan, now appointed as Bombay HC judge and former SBI chairman O P Bhatt, for having connection with Adani group. 

"This is a bit unfair because that way, people will stop being in committees we appoint. If we wanted to have retired HC judges we would have. But we wanted domain experts. We wanted a more robust analysis," the bench also comprising Justices J B Pardiwala and Manoj Misra, said.

Bhushan claimed Sundaresan had in 2006 appeared for Adani group in connection with a Sebi case. He also contended that Bhatt is presently working as the Chairman of Greenko, a leading renewable energy company.

"Since March, 2022 Greenko and Adani Group are working in a close partnership to provide energy to Adani Groups facilities in India. The said partnership came to be entered right before an energy deal in Davos between Andhra Pradesh government and three energy companies including Greenko and Adani, showing clear conflict of interest." He claimed the role of Sebi was also suspect as they knew about about FPIs made through Mauritius route.

Bhushan cited a letter written by then DRI chairman in 2014 to the then Sebi chief U K Sinha.

He also cited the Hindenburg report of January, 2020. As Bhushan claimed that there were many factual revelations in Hindenburg report, the bench said, "We don't have to accept Hindenburg report as ipso facto correct. That's why we asked Sebi to investigate." Expressing displeasure with the charges, the bench also said, "Why should we consider these unsubstantiated allegations? By that logic, no lawyer who has appeared for an accused should become a High Court judge. It is a 2006 appearance and you say something in 2023."

Solicitor General Tushar Mehta for the Sebi opposed the plea, saying the counsel should check before picking up random information from social media platforms. The bench also said, "Mr Bhushan, you have to be very careful. We are not giving character certificate to anyone. Equally, you must think of fundamental principles of fairness. You are relying upon a DRI communication to Sebi. DRI closed the matter. CESTAT concluded it."

Mehta said that NGO OCCRP prepared a report, when it was reached out for documents, which said that the papers can be obtained from an NGO operated by Bhushan, which, in fact, showed a conflict of interest. Bhushan referred to reports published by The Guardian and the Financial Times too.

On this, the bench said, "We don't think, you can ask a statutory regulator to take a newspaper source, even if it is Financial Times, as gospel truth. We cannot make an assumption that it is credible or lacking credibility". 

Bhushan reiterated Hindenburg's is a voluminous report with a lot of evidence.

Mehta said that there is a growing tendency to plant stories outside to influence decision in the country.

"We cannot rule out possibility of these reports being published by someone else like the OCCRP. Before reserving its order on additional directions to the Sebi, the bench also pulled up a counsel for seeking a probe against SBI and LIC in the matter, by asking him, "If it was some college debate, and if he realises the implications of his prayer made without any substantial material."

During the hearing, Mehta said, Sebi had concluded its probe with regard to 22 transactions while two were still pending as those depended upon the assistance received from foreign regulators.