Supreme Court on Tuesday allowed market regulator SEBI to continue probe in the Adani-Hindenburg case till August 14.
When asked by CJI-led bench on the status of investigation, Solicitor General Tushar Mehta, appearing for SEBI, said, "The investigation is going on, with full speed as much as possible."
Advocate Prashant Bhushan, appearing for a petitioner, said SEBI has said they have amended the rules for related party transactions and reporting.
CJI D Y Chandrachud said: "He's (Bhushan) saying that you're saying that as of today you were prevented from investigation into beneficial owners and related party transactions. We'd like to know what circumstances led to changes on regulations on 'opaque structures', 'beneficial ownership' definition."
On Monday, SEBI filed a 43-page affidavit at the apex court with recommendations from SC-appointed expert committe.
On Tuesday, Supreme Court asked government to give soft copy of the SEBI affidavit to the petitioners and also to submit soft copy to court and ensure that it is uploaded on record.
Securities and Exchange Board of India (SEBI) on Monday told the Supreme Court that its 2019 rule changes do not make it tougher to identify beneficiaries of offshore funds, and action will be taken if any violation is found or established.
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SEBI said it has continuously tightened rules concerning beneficial ownership and related-party transactions - key aspects in the allegations of Adani Group manipulating its stock price.
A Supreme Court-appointed expert committee had in an interim report in May stated that it saw ''no evident pattern of manipulation'' in billionaire Gautam Adani's companies and there was no regulatory failure.
It, however, cited several amendments the SEBI made between 2014-2019 that constrained regulators' ability to investigate, and its probe into alleged violation in money flows from offshore entities has ''drawn a blank''.
Without making any mention of the status report of its own investigation into allegations against Adani Group, SEBI in its latest affidavit to the Supreme Court said it did not agree with the expert committee observation of difficulties in identifying holders of economic interest behind an offshore fund.
It also differed with the panel observation that stocks will re-price if the markets feel actions taken in the past by the company were not desirable, saying even if the market may re-price the stocks of the company based on the past transactions, ''there is no bar on SEBI to examine any securities laws violations because re-pricing of the stock has happened.'' SEBI indicated it does not agree with the expert committee's views and action will be taken if any violation is found/established.
After a report of US short-seller Hindenburg Research alleging accounting fraud, stock market manipulation and improper use of offshore entities by Adani Group stirred a political row and triggered a rout in the conglomerate's stocks, dethroning Adani as the world's third richest man, the Supreme Court had on March 2 constituted the expert committee to investigate if there was any failure to disclose transactions with related parties and if stock prices were manipulated.
The committee was to work in parallel with the probe by Sebi into offshore entities investing in the Adani Group. The regulator was first asked to complete the probe in two months and then given another three months till August 14.
In the affidavit, SEBI said its 2019 rule changes in fact ''tightened the disclosure requirement'' related to beneficial owners.
In its 43-page filing, SEBI opposed the expert committee's recommendation that a firm timeline for the regulator to complete its investigation must be ''embedded into the law'', saying prescribing such limits ''may compromise the quality of investigation'', create constraints and increase litigation.
In the affidavit, SEBI has given its views on the recommendations by the expert committee on issues like effective enforcement policy, judicial discipline, robust settlement policy, necessary timelines, surveillance and market administration measures, creation of financial redress agency and others.
''Prescribing timelines for initiation of investigation and proceedings may not be appropriate as the Board is mandated to form a prima-facie opinion (reasonable grounds) to appoint an investigating authority,'' it said.
''Further, the nature, scope and complexity of cases in the securities market vary significantly, and 'reasonable time' to complete investigation would depend on the facts of each specific case and availability of information. Therefore, prescribing specific timelines to complete the investigation may compromise the quality of the investigation,'' the SEBI said.
With inputs from PTI
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