No Transfer of Adani-Hindenburg Probe From SEBI: Courts Will Not Substitute Their Wisdom for Expert Regulator's Policy

A batch of Article 32 petitions filed in February 2023 followed a Hindenburg Research report of 24 January 2023 alleging share-price manipulation and undisclosed related-party transactions by the Adani group; Hindenburg had taken a short position (para 1). The petitioners sought a court-monitored investigation, an SIT or CBI probe and other directions (para 2). On 2 March 2023 the Court constituted an Expert Committee chaired by Justice Abhay Manohar Sapre, while SEBI continued its own investigation (paras 4-5). The Committee reported on 6 May 2023, and SEBI reported on twenty-four investigations in August 2023 (paras 6-7).

Courts do not sit in appeal over a specialised regulator's policy; review is confined to fundamental rights, constitutional or statutory violation, and manifest arbitrariness (para 17). The FPI and LODR amendments were not challenged as ultra vires, followed a lawful procedure and in fact tightened disclosure, so the plea of regulatory failure failed (paras 28-29, 67). Under Articles 32 and 142 the Court may transfer an investigation to the CBI or an SIT, but only sparingly, where the statutory agency shows glaring, wilful and deliberate inaction (para 32). SEBI had completed twenty-two of twenty-four investigations, and a ten-day delay in reporting did not show deliberate inaction (paras 30, 35, 37). Newspaper articles and third-party reports such as the OCCRP's cannot be conclusive proof of an inadequate investigation (paras 39-40). The DRI letter concerned an issue already settled by concurrent findings, including those of the CESTAT and this Court (para 43). The allegations against Committee members were belated and unsubstantiated (paras 46, 50). The Court cautioned that petitions relying on unverified material are counterproductive (para 68).