New Delhi:
The allegations of US short-seller Hindenburg and the report of the Organised Crime and Corruption Reporting Project (OCCRP) targeting the Adani Group cannot be treated as gospel, the Supreme Court said today, raising tough questions on demands for a probe based on the reports.
Lawyer Prashant Bhushan, who had petitioned the Supreme Court for a probe into the allegations and also action against SEBI for missing its deadline for a report on the Hindenburg case, faced some difficult questions from the Supreme Court.
Earlier this month, an application before the Supreme Court asked for an inquiry into allegations by the non-profit OCCRP against the Adani Group.
The OCCRP, funded by billionaire George Soros, had alleged insider trading in the Adani Group via two foreign investors. The Adani Group has called them "recycled allegations" and another concerted bid by Soros-funded interests supported by a section of the foreign media to revive the "meritless Hindenburg report".
The capital markets regulator SEBI also dismissed the report as unreliable, coming from a "foreign non-profit (NGO)".
The Solicitor General of India, Tushar Mehta, said the OCCRP had sent its report to the government but had not shared details. "They said that they can't give details to us... instead, they directed us to an NGO linked to Bhushan. This is a conflict of interest," Mr Mehta told the Supreme Court.
"Our regulation will become meaningless if we start looking into such self-serving reports," the government lawyer added.
On SEBI missing the deadline, he said the regulator had exceeded it by just 10 days.
Prashant Bhushan, defending his charge against SEBI, said it had a letter in 2014 from the Directorate of Revenue Intelligence (DRI) alleging over-invoicing by the Adani Group but had never acted on it.
The government lawyer pointed out that the DRI had completed the probe in 2017 and had found no irregularities. "This is the problem when they rely on random information in public," Mr Mehta said, adding that the Supreme Court had confirmed the DRI order.
The Supreme Court told Mr Bhushan: "We have to be careful. We are not giving any character certificates. We can't make random allegations."
Mr Bhushan also raised questions on the committee of domain experts appointed by the Supreme Court to look into India's regulatory mechanism to protect investors. The judges pointed out that the members were selected by the top court, not SEBI.
As Mr Bhushan pressed on about SEBI not acting on reports by the OCCRP and published in foreign media, the Supreme Court said: "We are not discrediting what's reported on FT, Guardian, but does it have evidentiary value for SEBI?"
If journalists could get hold of documents, argued Mr Bhushan, why couldn't SEBI?
"SEBI is bound by the laws of evidentiary value. SEBI is answerable to the appellate authorities. SEBI can't say we relied on newspaper stories," the Supreme Court said firmly.
"How do we rely on the newspaper stories? How do we say these are credible?"
The Solicitor General said stories were being planted outside India to influence policies in the country.
"You said there are overwhelming evidence. What are those?" the court asked Mr Bhushan, who cited the Hindenburg report.
Chief Justice DY Chandrachud said, "We cannot treat the Hindenburg report as the true state of affairs." That was why the court had asked SEBI to investigate.
"A publication's work cannot be treated as a gospel of truth," the Supreme Court said.
The Supreme Court-appointed committee in its report in May had given a clean chit to the Adani Group. It had said there was no regulatory failure on the part of SEBI, and no price manipulation on the part of the Adani Group and that the conglomerate had taken necessary steps to comfort retail investors amid severe market turmoil following the publication of the Hindenburg report.
