 "Adani Group, Adani")
The Supreme Court on Tuesday adjourned the hearing in the Adani-Hindenburg case to August 14. The Securities and Exchange Board of India (Sebi) needs to complete its probe into the case by this date.
Solicitor General (SG) Tushar Mehta, appearing for the Centre and Sebi, said they have received the report of the expert committee. “So far as reference made to Sebi (is concerned), some guidelines are given. We have filed our response. It's a constructive response. Since it was filed late, it's not before your lordships,” he said.
Mehta was referring to the latest response of Sebi, in which the market regulator had said that it was ‘not appropriate’ and ‘not possible’ to put straightjacket timelines for its proceedings and investigations.
The report also informed the SC that its 2019 rule changes do not make it tougher to identify beneficiaries of offshore funds
Responding to this, Chief Justice of India D Y Chandrachud asked, “What is the status of the investigation?”
Mehta said, “That is in the report. Let us have that on record. For your lordship's assistance, since the committee has given a report, we have given a response.”
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The submission was made to the apex court in response to the recommendations made by an expert committee set up in the Adani-Hindenburg case. Besides overseeing the probe, one of the mandates given to the six-member panel headed by former SC judge Justice A M Sapre was to suggest structural reforms for Sebi.
In its 173-page interim report in May, the panel made several recommendations to strengthen the existing statutory and regulatory framework of Sebi.
Meanwhile, Senior Advocate Prashant Bhushan, who represents one of the petitioners in the case, said that the expert committee (of the Supreme Court) had stated that there is no chance of Sebi proceeding anywhere with the investigation given what they have done. “They have done things fatal to the investigation,” he said.
The CJI told Mehta that Sebi’s latest report should be circulated to the parties concerned in the case. "Sebi has filed a response to the report to the expert committee. It would be appropriate that the response is being circulated with papers which haven't been done as it was filed yesterday,” he said.
The court noted that Bhushan has also submitted a reply to the report of the expert committee. Bhushan told the bench that the expert committee said that the Sebi investigation cannot go anywhere because they amended the definition of opaque structure, related party transactions - in order to prevent this 'kind of fraud being exposed'.
The CJI then told Mehta, “Mr SG you may go into the background of amendment- why was the amendment passed.”
Sebi countered the expert panel’s observation that it had faced difficulties in identifying economic interest holders partly because of the repeal of ‘opaque structures’ provisions in foreign portfolio investment (FPI) regulations.
The regulator stated that the changes made in FPI regulations in 2018 and 2019 effectively tightened the disclosure requirement related to beneficial owners.
The Sebi report said that the reference to ‘opaque structures’ was removed as it had an element of redundancy and ambiguity. Further, the submission states that a stricter threshold of 10 per cent was also mandated for FPIs from high-risk jurisdictions in 2018 for beneficial owner identification
Sebi’s role and functioning had come under question following allegations made by New York short-seller Hindenburg Research and the subsequent Rs 12-trillion wipeout in market capitalisation at Adani Group companies.
In March, SC had given Sebi three months to complete its investigation in the Adani-Hindenburg matter. In May, it allowed the regulator time until August 14 to finish its probe
