SEBI’s final order in the Adani-Hindenburg matter, issued in September 2025, marks a significant moment in the evolution of Indian securities regulation. The order does more than resolve a high-profile controversy; it reasserts the regulator’s commitment to procedural integrity, interpretive discipline, and constitutional boundaries in enforcement.
At its core, the order addresses two intersecting legal questions: how Related Party Transactions (RPTs) should be classified under evolving regulatory frameworks, and whether amended definitions can be applied to past conduct. SEBI’s refusal to adopt retrospective scrutiny and its insistence on textual precision offer valuable lessons for practitioners, compliance professionals, and market participants alike.
SEBI’s inquiry extended over 15 months, involving a detailed examination of financial flows, intermediary entities, and disclosure practices. The regulator’s posture was notably restrained, eschewing speculative triggers and maintaining distance from media narratives and political commentary.
This approach reflects a foundational principle of regulatory adjudication: enforcement must be grounded in law and evidence, not sentiment. In matters involving reputational allegations and public scrutiny, procedural rigour is not merely desirable; it is essential. It ensures fairness to the parties involved and preserves institutional credibility.
Globally, regulators such as the U.S. Securities and Exchange Commission (SEC) and the UK’s Financial Conduct Authority (FCA) have faced similar challenges in balancing transparency with restraint. SEBI’s order aligns with this approach, prioritising statutory interpretation and evidentiary thresholds over reactive enforcement.
A central issue in the proceedings was whether certain transactions constituted Related Party Transactions under SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations. Prior to the April 2023 amendment, the definition of an RPT was limited to direct dealings between a listed entity and a formally designated related party.
SEBI held that the entities involved were not “related parties” under the law in force at the time. The transactions were conducted at arm’s length, repaid with interest, and did not trigger disclosure or approval requirements applicable to RPTs.
This interpretive discipline is significant. In securities law, RPT classification carries substantial compliance obligations. Misclassification, especially when assessed retrospectively, can lead to reputational harm and regulatory exposure. SEBI’s refusal to expand the definition retroactively affirms the principle that businesses must be evaluated based on the legal standards applicable at the time of conduct.
For governance and compliance teams, the takeaway is clear: contemporaneous documentation, clarity in contractual relationships, and legal vetting of transaction structures are essential safeguards.
SEBI’s decision not to apply the amended RPT definition to past transactions reflects a well-established legal principle: substantive changes in law must operate prospectively unless expressly stated otherwise.
The April 2023 amendment broadened the RPT definition to include indirect transactions “the purpose and effect of which is to benefit a related party.” However, SEBI held that this expanded scope could not be used to reclassify transactions executed prior to its effective date.
This position is consistent with constitutional safeguards under Article 20(1), which prohibits retrospective penalisation. Indian jurisprudence, from Keshavan Madhava Menon v. State of Bombay to Hitendra Vishnu Thakur v. State of Maharashtra and State of Punjab v. Bhajan Lal, has repeatedly affirmed that retrospective application of substantive law is impermissible unless explicitly provided for.
SEBI’s own September 2021 board memorandum acknowledged the use of “innovative structures” to avoid RPT classification and proposed the amendment to close those gaps. Crucially, the regulator gave the amendment deferred prospective effect, allowing companies time to realign their affairs. Applying it retrospectively would not only violate settled legal principles but also undermine regulatory predictability.
The order offers valuable guidance for legal practitioners and compliance professionals. First, it underscores the importance of defending corporate conduct within the bounds of law, not public perception. Second, it highlights the role of statutory interpretation in regulatory proceedings, especially where definitions evolve over time.
For governance teams, the case reinforces the need for proactive compliance: ensuring that transaction structures, disclosures, and board approvals are aligned with prevailing regulations. It also signals that SEBI’s enforcement posture is evolving, with greater emphasis on substance over form and a willingness to revisit regulatory blind spots through formal amendments [Union of India v. Tulsiram Patel].
SEBI’s final order in the Adani matter is a reaffirmation of rule-of-law principles in securities enforcement. By upholding procedural rigour, resisting retrospective reinterpretation, and applying statutory definitions with precision, the regulator has set a precedent for principled adjudication.
In a regulatory environment increasingly shaped by global scrutiny and media narratives, this order serves as a reminder that legal certainty, interpretive discipline, and procedural fairness remain the cornerstones of credible enforcement.
About the author: Nirali Mehta is a Partner at Mindspright Legal.
Disclaimer: The opinions expressed in this article are those of the author. The opinions presented do not necessarily reflect the views of Bar & Bench.
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