Supreme Court refuses to entertain PIL on Viceroy’s allegations against Vedanta

The Supreme Court on Friday refused to entertain a public interest litigation (PIL) petition seeking a probe into allegations made by US-based short-seller Viceroy Research LLC against Vedanta Limited, Hindustan Zinc Limited, Vedanta Resources Limited and related entities [Shakti Bhatia Vs Union of India].

A Bench of Justices PS Narasimha and AS Chandurkar said that it was not inclined to entertain the matter prompting the petitioner, one Shakti Bhatia, to withdraw the petition.

Senior Advocate Gopal Sankaranarayanan, appearing for the petitioner, submitted that the relief sought was narrow and limited. The prayer is only to direct the regulators, Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) to act on complaints that had already been lodged with them and to carry out their statutory duties of inquiry and investigation.

He stressed that unlike the Adani–Hindenburg litigation in which the Court had been asked to presume guilt and to monitor an expert committee, the present petition did not call for such sweeping reliefs. Instead, the petitioner’s case is simply that the regulators had been alerted to potential violations but had taken no visible action, Sankaranarayanan said.

He pointed out that Viceroy had written detailed complaints to SEBI and RBI and that the petitioner had independently corroborated some of the issues flagged by examining MCA21 filings and public disclosures.

Sankaranarayanan emphasised that the petitioner was not endorsing Viceroy’s conclusions or accusing Vedanta of guilt but was only seeking that regulators discharge their statutory mandate in the face of serious allegations involving listed companies.

Solicitor General Tushar Mehta, appearing for the Union government, argued that the PIL was not a bona fide petition but appeared to have been orchestrated by the foreign short-seller itself.

Mehta pointed out that after the PIL was filed, it was Viceroy, not the petitioner, who wrote to SEBI informing it of the filing. This, he argued, showed that the petitioner was “only a name lender” for Viceroy.

The Solicitor General went on to caution the Court against what he described as a recurring “systematic pattern where outside agencies create reports and influence the Indian stock market.”

Drawing parallels with the modus operandi of other foreign short-sellers, he said such actors seek to destabilise Indian companies and markets by releasing reports and then amplifying their effect through litigation.

Mehta argued that the highest court of the country could not be used in this manner, remarking that those sitting abroad “cannot take the Supreme Court on a joyride."

He submitted that if the regulators considered it appropriate, they could examine the complaints and issue a report, but the petition as filed was not maintainable.

The Court eventually declined to entertain the petition whereupon the petition withdrew the same.

Two Benches of the apex court had recused from hearing the case on earlier occasions.

On July 9, 2025, US-based short-seller Viceroy Research LLC released an 87-page report titled “Vedanta – Limited Resources”.

The report levelled serious allegations of large-scale fraud, financial manipulation and regulatory breaches by Vedanta Limited (VEDL), Hindustan Zinc Limited (HZL), Vedanta Resources Limited (VRL) and affiliated entities.

Viceroy’s report alleged that VRL functioned as a “parasite” holding company with no significant operations, kept alive by cash extracted from its “dying host” VEDL. The claims included:

• Fraudulent and unfair trade practices under SEBI’s PFUTP Regulations, 2003.

• Misrepresentation of financial disclosures and diversion of funds through related-party brand and management fee arrangements.

• Misuse of upstream dividends and creation of improper encumbrances, allegedly undermining shareholder rights.

• Failure to disclose material events as required under SEBI’s LODR Regulations, 2015.

• Opaque audit and corporate structures used to obscure liabilities and avoid regulatory oversight.

The report further highlighted inflated asset valuations, undisclosed liabilities, systemic capitalisation of expenses and questionable donations to promoter-linked entities.

The Viceroy report said that it sent complaint letters to SEBI on July 14 and the RBI on July 15 detailing its findings. The letters were published online after what it described as a lack of public response and citing the gravity of the issues involved.

Vedanta meanwhile obtained a legal opinion from former CJI Justice DY Chandrachud, who recommended that the company can initiate a defamation plea against the short-seller. However, Viceroy research criticised the legal opinion.

The petitioner Shakti Bhatia then moved the Court claiming that he independently corroborated portions of the Viceroy report, particularly regarding undisclosed related-party transactions, by reviewing MCA21 filings, SEBI disclosures and Registrar of Companies records.

Therefore, he filed the present plea arraigning the Union of India, SEBI, RBI and MCA as respondents.

As per the plea, certain high-value transactions involved counterparties neither declared as related parties nor subjected to shareholder approval as mandated.

According to the petitioner, these acts if proven, would constitute material breaches of the Companies Act, 2013, and SEBI’s LODR Regulations, amounting to financial fraud and harming minority shareholders.