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Allegations of Adani group investigations since 2016 'factually baseless': Sebi to Supreme Court

Unusually, the market regulator’s counter-affidavit was filed by 22-year-old Satyansh Maurya, assistant manager, Sebi — possibly the youngest ever official to move an affidavit before SC

R. Balaji New Delhi Published 16.05.23, 05:15 AM
Gautam Adani.

Gautam Adani. File Photo

Market regulator Sebi on Monday told the Supreme Court that the claims that it had been investigating the Adani group since 2016 were “factually baseless”.

It sought six more months to complete the court-ordered probe in connection with the allegations of stock market manipulation and accounting fraud against the business conglomerate, levelled by US short-seller Hindenburg Research in January this year.


Unusually, the market regulator’s counter-affidavit was filed by 22-year-old Satyansh Maurya, assistant manager, Sebi — possibly the youngest ever official to move an affidavit before the Supreme Court. Older, senior functionaries normally file sworn documents before courts.

Anamika Jaiswal — one of the public-interest petitioners seeking a probe into the Hindenburg allegations — had on May 12 told the apex court that Sebi had been investigating the Adani group since 2016 for stock market manipulation. She is being represented by advocate Prashant Bhushan.

Jaiswal’s affidavit said: “It is hard to believe that SEBI cannot give even a preliminary finding on an investigation that commenced in 2016.”

But the Sebi counter-affidavit said on Monday: “I say and submit that the ‘investigation’ referred to in paragraph 5… of the reply affidavit (filed by Jaiswal) has no relation and/ or connection to the issues referred to and/ or arising out of the Hindenburg Report.”

“I further say and submit that the matter referred to in paragraph… pertains to the issuance of Global Depository Receipts (GDRs) by 51 Indian listed companies, in respect of which investigation was conducted. (A global depository receipt is a negotiable certificate that represents shares in a foreign company traded on a local stock exchange.)

“However, no listed company of Adani Group was part of the aforesaid 51 companies…. Hence, the allegation that Securities and Exchange Board of India (Sebi) is investigating Adani since 2016 is factually baseless. I, therefore, say and submit that reliance sought to be placed on the investigation pertaining to GDRs is wholly misplaced.”

Later, on Monday night, Bhushan told The Telegraph that Jaiswal’s petition was based on a written reply made in Parliament on July 19, 2021, by the Union minister of state for finance, Pankaj Chaudhary, to a query from Trinamul Congress member Mahua Moitra.

“Yes, Madam. Sebi is investigating some Adani group companies with regard to compliance with Sebi regulations,” Chaudhary had said.

Bhushan said his client’s affidavit referred to the minister’s assertion in the statement that “in a matter pertaining to issuance of global depository receipt (GDR) by certain Indian listed companies, Sebi vide order dated 16 June 2016, had directed depositories to freeze particular beneficiary accounts of certain FPIs including Albula Investment Fund, Cresta Funds and APMS Investment Fund. However, no order in respect of other beneficiary accounts of these FPIs has been passed by Sebi.”

Bhushan, while speaking to this newspaper, pointed out that Jaiswal’s affidavit also said that the Albula Investment Fund, Cresta Fund and APMS Investment Fund, registered in Mauritius, together owned shares worth more than Rs 43,500 crore (more than 95 per cent of their total investment portfolio) in Adani group companies, namely, Adani Enterprises, Adani Green Energy, Adani Transmission and AdaniGas.

Sebi’s counter-affidavit said the regulator had begun investigations into alleged violations of the legal requirement of Minimum Public Shareholding (MPS), but did not directly refer to the Adani group, which faces the charge of MPS violation.

On March 2, the apex court had directed Sebi to investigate whether the Adani group had violated Rule 19A of the Securities Contracts (Regulation) Rules by surreptitiously controlling more than 75 per cent of the shares of its public-listed companies, thereby manipulating the prices of their shares in the market.

Under the Sebi’s listing rules for private companies, no promoter is permitted to hold more than 75 per cent of the issued equity. This guarantees a public float of at least 25 per cent, ensuring that there is transparency in price discovery and people close to the promoter cannot manipulate or influence prices.

Related violations had been alleged in one of the public interest pleas moved following the Hindenburg allegations.

Under Rule 19A, “Every listed company (other than public sector company) shall maintain public shareholding of at least twenty-five per cent — Provided that any listed company which has public shareholding below twenty-five per cent on the commencement of the Securities Contracts (Regulation) (Second Amendment) Rules, 2018, shall increase its public shareholding to at least twenty-five per cent, within a period of three years.”

Extension plea

Sebi sought a six-month extension of the probe deadline, which had expired on May 2, arguing the investigations were complex and covered many countries.

On May 12, the bench of Chief Justice D.Y. Chandrachud and Justices P.S. Narasimha and J.B. Pardiwala had orally declined a six-month extension, saying the regulator should show some “alacrity” in completing the probe quickly.

The bench had indicated that it could on Monday formally grant an extension of three months.

Although the matter was listed on Monday, the bench could not take it up because of a shortage of time. It is likely to be taken up on Tuesday.

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