HC quashes ₹388 crore fraud case against Adanis after 13 years

The court ruled that the allegations did not meet the legal requirements for cheating under the Indian Penal Code (IPC), effectively exonerating the Adani Group and its promoters from the case

Mumbai: The Bombay High Court on Monday discharged Adani Enterprises Ltd and its promoters from a probe initiated by the Serious Fraud Investigation Office (SFIO) into allegations of share price manipulation and fraudulent stock market activities. SFIO is a statutory agency in India tasked with investigating corporate fraud.

HC quashes ₹388 crore fraud case against Adanis after 13 years

The court ruled that the allegations did not meet the legal requirements for cheating under the Indian Penal Code (IPC), effectively exonerating the Adani Group and its promoters from the case.

The case dates back to 2012 when the SFIO filed a criminal case against Adani Enterprises Ltd (formerly Adani Exports Ltd) and its promoters, Rajesh Shantilal Adani and Gautam Shantilal Adani. The agency alleged that Triumph Securities Ltd, in collusion with Adani Enterprises, engaged in a criminal conspiracy to manipulate the share prices of Adani Exports Ltd. According to the complaint, this manipulation misled the public into believing that the price movement was natural, leading to artificial losses for investors while benefiting the accused. The SFIO claimed that KP entities made unlawful gains of approximately ₹151.40 crore, while Adani Group promoters allegedly profited by ₹388.11 crore through these transactions.

Senior counsel Amit Desai, representing Adani Enterprises and its promoters, argued that the SFIO lacked the authority to file a complaint under the IPC, as stock market transactions and price manipulation fall exclusively under the jurisdiction of the Securities and Exchange Board of India (SEBI). He further contended that, in the absence of any public grievance, the allegation of cheating was baseless and beyond the SFIO’s mandate.

Conversely, Additional Solicitor General Anil Singh, representing the SFIO, cited a 2004 central government order empowering the agency to investigate corporate affairs. He maintained that sufficient grounds existed to prosecute the petitioners under the IPC.

Delivering its verdict, the single-judge bench of Justice R N Laddha ruled in favour of the Adani brothers, citing the absence of allegations from affected parties and a lack of concrete evidence of deception or inducement. The court stated that mere assertions could not constitute the offence of cheating.

“Since the fundamental charge of cheating is not substantiated, the ancillary charge of criminal conspiracy, which necessitates a substantive offence, also becomes unsustainable,” the court observed.

The bench further held that the sessions court’s intervention was unwarranted and exceeded its jurisdiction. Finding no error in the original discharge orders, the court reinstated them and set aside the revised ruling. Additionally, it reaffirmed that the SFIO lacked the legal authority to initiate the proceedings, rendering the case untenable.