Supreme Court admits fresh plea on Adani crash, clubs it with two others
The court last Friday asked Centre to put in place a “robust framework” by amending laws and strengthening the supervisory control of Sebi in order to protect the interests of thousands of investors.
The Supreme Court has listed on Friday a petition seeking a probe against the Adani Group for allegedly swindling lakhs of crores of public money, and an investigation into Life Insurance Corporation (LIC) and State Bank of India (SBI) for investing in Adani Enterprises at a higher price despite a slump in the firm’s stocks .
The petition, filed by Congress leader Jaya Thakur, was mentioned before a bench headed by Chief Justice of India (CJI) Dhananjaya Y Chandrachud on Wednesday for urgent listing. As the court is already seized of two petitions filed by two lawyers – Vishal Tiwari and ML Sharma – that are coming up for hearing on Friday, the bench, also comprising justice PS Narasimha, said: “Tag with the February 17 matters.”
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Thakur, who is a doctor by profession and is the general secretary of the Madhya Pradesh Mahila Congress, filed the public interest litigation (PIL) following a report by the US-based Hindenburg Research alleging irregularities and market manipulation by the Adani Group. Though the Adani Group dismissed the charges as “unresearched” and “maliciously mischievous”, stocks of its companies fell sharply leading to a loss in market value of over ₹10 lakh crore.
“The finding of Hindenburg report indicates that the Respondent No.13 (Adani Group) has inflated share price of their various companies and by using the inflated price they have obtained loans worth ₹82,000 crores from various public sectors and private banks,” the petition said, while adding that the petitioner has approached the top court “to safeguard the saving and investment” of several millions of citizens and “to seek punishment for Respondent No.13 and his group of companies.”
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The two other petitions that were last heard on Monday dealt with the fallout of Hindenburg research with the one by Tiwari demanding a court-monitored probe into the report’s contents, and the one by Sharma seeking criminal action against short-seller firm Hindenburg’s founder Nathan Anderson of conspiring with associates in India to bring down the market. The petition by Sharma also sought action against Securities Exchange Board of India (Sebi) for failing to suspend trading of Adani group shares following the report.
The court last Friday asked Centre to put in place a “robust framework” by amending laws and strengthening the supervisory control of Sebi in order to protect the interests of thousands of investors. The court also mooted the proposal of having an expert committee to propose necessary changes.
In the next hearing on Monday, the Centre’s agreed to the court’s proposal for having a panel, and sought time to suggest its composition and remit so that it does not affect market sentiments and flow of capital and investments.
To be sure, the decline in the market value of a share by lakhs of crores does not always mean investors have lost that much money. The losses are a function of the price at which the investors bought the shares (and even then, till they sell the shares, this is notional) and also corresponds to the extent of their holding. In the case of the Adani Group’s listed companies, their low free-float (proportion in the hands of public investors) means this was likely low. At its peak in December, the flagship Adani Enterprises stock had surged 1,700% in two years. But mayhem in Adani group companies was precipitated in the last week of January following the report by Hindenburg, which accused the conglomerate of improper use of tax havens and stock manipulation, while also raising concerns over high debt levels.
Thakur’s petition was not restricted to the Hindenburg report alone, and sought a probe into various offshore shell company in tax havens such as Mauritius, Cyprus, UAE, Singapore and the Caribbean islands, and also mentioned the alleged seizure of a large quantity of drugs seized from Mundra Port operated by the Adani Group.
The plea also questioned the role of SBI and LIC in investing money into a follow on price offer (FPO) released by Adani Enterprises on January 27 at the rate of ₹3,200 per share at a time when the same share was priced between ₹1,600 and ₹1,800 on the bourses. The FPO was later withdrawn by the Adani Group.