How to accept Hindenburg report on Adani Group as ‘credible’? Why did the Supreme Court ask this question?

The Supreme Court on Friday asked lawyer Prashant Bhushan how the apex court can consider the Hindenburg report on Adani group companies as ‘credible’. CJI D.Y. Chandrachud said the apex court will have to trust ‘our investigating agencies’ as Bhushan has raised questions about the credibility of the investigation conducted by SEBI. The court said that we have no reason to doubt the investigation of SEBI. SEBI is a statutory body tasked with investigating stock market violations. Is it appropriate for the Supreme Court to reconstitute – without any material – an SIT of our own?

Justice J.B. in the bench. Pardiwala and Justice Manoj Mishra were also included. Bhushan, appearing for the petitioners, urged the top court to set up another SIT or a group of experts to probe the Adani-Hindenberg dispute. He said that the investigation report prepared by SEBI has not been disclosed. On this CJI Chandrachud said that Mr. Bhushan, they (SEBI) have completed the investigation. They are saying that now it is in their judicial power. Should SEBI disclose investigation before issuing show cause notice?

He said that SEBI cannot charge crimes without giving the entities under investigation an opportunity of being heard. During the hearing, Solicitor General Tushar Mehta, appearing for SEBI, said that the market regulator is not seeking extension of time and 22 out of 24 investigations have already been finalized. Regarding the remaining two cases, he said the report is interim in nature and SEBI has sought information from foreign agencies and it has ‘no control over the time limit’.

During the hearing, the apex court emphasized that the Central Government and SEBI should take steps to prevent losses of investors in future. One of the main reasons due to which we had to intervene – is the extreme volatility of the stock market which caused losses to investors. The CJI-led bench asked Mehta what, now, Sebi intends to do to protect against such volatility due to short selling, leading to losses for investors. Mehta said that SEBI is taking legal action as per law in cases related to short-selling. “Wherever we see short selling, we will take action and we are taking action,” he said.

The Supreme Court also commented strongly on the petitions demanding investigation of Life Insurance Corporation (LIC) and State Bank of India (SBI). The court said that you are asking the court – without any evidence – to direct an investigation into SBI and LIC. Do you realize the impact of such instruction? Is this a college debate? After hearing the parties in detail, the apex court reserved its decision in the case.