Contempt Plea Filed Against SEBI Over Alleged Violation of Adani Probe Timeline

A plea has been lodged in the Supreme Court, urging the initiation of contempt proceedings against the Securities and Exchange Board of India (SEBI). The petitioner, Vishal Tiwari, contends that SEBI has breached the stipulated timeline for concluding its investigation and presenting the report on allegations of stock price manipulation by the Adani group.

Tiwari's application highlights that despite the court's directive, SEBI has not adhered to the prescribed timeline and failed to furnish the final report. The court had instructed SEBI on May 17, 2023, to submit the report by August 14, 2023. However, on August 25, 2023, SEBI submitted a status report, indicating the completion of 22 investigations out of 24, with two remaining in interim status.

The application also references a recent report by the Organised Crime and Corruption Reporting Project (OCCRP) that raises concerns about the Adani Group's alleged investments through "opaque" Mauritius funds.

Emphasizing the primary focus of the Public Interest Litigation (PIL), the application underscores the need to strengthen the regulatory system to safeguard investors and ensure the security of their investments in the stock market. It raises questions about the efficiency of the current regulatory authority and proposes the possibility of establishing a new regulatory body with enhanced mechanisms to prevent future market incidents damaging to investors.

Tiwari insists on the importance of a robust mechanism overseeing companies' conduct and practices, ensuring compliance with regulatory rules. The application notes a lack of substantial steps taken by the Union Government in line with expert committee recommendations for investor protection.

Addressing SEBI's objection to a mandated investigation timeline, the application argues that timely investigations are essential to prevent the disappearance of evidence and maintain investor confidence. It criticizes SEBI for failing to submit the report by the court-directed deadline and asserts that delays impact the investigation's integrity, fueling suspicions among investors and potentially leading to manipulations and destruction of vital evidence.

The application calls for an explanation from SEBI regarding its non-compliance with the court's timeline and suggests seeking an independent body's involvement, given the renewed concerns raised by the OCCRP report.

The Supreme Court, on November 6, announced that the apex court registry would examine the listing of PILs related to the allegations of stock price manipulation by the Adani group. Earlier, on July 11, the court had sought an update from SEBI on the progress of its investigation, emphasizing the need for a prompt conclusion. SEBI's subsequent status report mentioned completion of investigations in 22 out of 24 matters, awaiting information from tax havens to conclude the remaining two. The report affirmed that appropriate actions would be taken based on the investigation outcomes in compliance with the law.

In May, the Supreme Court-appointed expert committee had issued an interim report, finding no evident manipulation pattern in Gautam Adani's companies and attributing the lack of regulatory findings to SEBI's constrained investigative abilities due to amendments made between 2014 and 2019. The court had directed the distribution of the report to relevant parties for further deliberations.

The allegations against the Adani Group by Hindenburg Research had adversely affected Adani Group stocks on the stock exchanges. The group refuted the charges, asserting compliance with all laws and disclosure requirements.