Adani row: No contradiction between Sebi, Finance Ministry’s stance, SG Tushar Mehta tells SC

Solicitor General Tushar Mehta, representing Sebi, told the Supreme Court on Wednesday that there is no contradiction between the stands taken by Sebi in its affidavit and the reply of the Finance Ministry, which is related to the investigation into Minimum Public Shareholding (MPS) norms. 

Mehta told the apex court on Wednesday that linking Sebi's 2016 probe to the current development with regard to the scathing Hindenburg report will not be correct as they are totally "different and distinct". 

in January this year, Hindenburg Research had published a report on Adani Group companies accusing them of engaging in large-scale stock price manipulation, and falsely overinflating the value of their assets.

Sebi said that in 2016, global depository receipts (GDRs) had been issued against 51 listed companies, in respect of which an investigation was conducted. However, no listed company of Adani Group was part of the aforesaid 51 companies. 
“Pursuant to the completion of the investigation, appropriate enforcement actions were taken in this matter. Hence, the allegation that Sebi is investigating Adani since 2016 is factually baseless,” Solicitor General Mehta said on Wednesday.  

"In the context of the investigation into Minimum Public Shareholding (MPS) norms, Sebi has already approached 11 overseas regulators under the Multilateral Memorandum of Understanding (MMOU) with the International Organization of Securities Commissions (IOSCO). Various requests for information were made to these regulators. The first request to overseas regulators was made as early as October 6, 2020,” Mehta added. 

Besides, the Finance Ministry also said it stands by its July 2021 reply in which it had said the market regulator was investigating some of the companies of the conglomerate. 

"The government stands by its reply in the Lok Sabha on 19th July 2021 to Q. No. 72, which was based on due diligence and inputs from all concerned agencies," the finance ministry tweeted. 

Senior advocate Prashant Bhushan told the court that Sebi has been probing the Adani group companies for many years and that it should make the status of those inquiries on record. He alleged the demand to seek an extension is an attempt to shield the conglomerate. 

“It is quite clear and evident that there is no contradiction between the stand taken by Sebi in its affidavit and the reply of the Finance Ministry. This appears to be a blatant and deliberate attempt to mislead the stakeholders and public at large,” Tushar said on Wednesday. 

After Sebi filed a fresh affidavit with the apex court to strengthen its case for a six-month extension of the deadline to complete the probe against the Adani group, Congress and other opposition parties cited the finance ministry's July 2021 replies in Parliament to ask who was misleading. 

This was in response to Congress spokesperson Jairam Ramesh’s tweet, where he had posted a screenshot of the written reply made by Chaudhary. 

In the reply, the minister stated that "Sebi is investigating some Adani group companies with regard to compliance with Sebi regulations. Further, the Directorate of Revenue Intelligence is investigating certain entities belonging to the Adani group of companies under laws administered by it.” 

He had added that the Enforcement Directorate was not carrying out any investigation. “Sebi had vide order dated January 16, 2016, directed depositories to freeze particular beneficiary accounts of certain foreign portfolio investors including Albula Investment Funds, Cresta Funds Ltd and APMS Investment Ltd,” Chaudhury had said in his reply. 

Sebi gets extension to probe  

The Supreme Court on Wednesday granted Sebi up to three months to update it on its probe into Hindenburg’s allegations against the Adani Group.  

On May 15, Sebi informed the apex court that it had not conducted any public investigation into Adani group companies, listed on the stock exchange, since 2016 regarding the suspected misuse of global depository receipts (GDRs) for illicit purposes or any other violations. 

It requested an extension of six months to complete its investigation into the Adani-Hindenburg incident, emphasising the importance of ensuring justice. 

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