New material shows that Adani Group has been violating securities rules: Review petition in Supreme Court

A review petition has been filed against the Supreme Court's recent judgment refusing to interfere with the probe by the Securities and Exchange Board of India (SEBI) into the plummeting of Adani Group stock prices following the Hindenburg Research report. (Anamika Jaiswal v. Union of India and ors).The application by Anamika Jaiswal, one of the petitioners in the case, states that there are multiple apparent errors in the verdict under challenge."There are mistakes and errors apparent on the face of the impugned judgment/order dated 03.01.2024, and in light of certain new material that have been received by the counsel of the petitioner, the Petitioner respectfully submits that there are sufficient reasons which require review of the impugned order," it is stated..As per the applicant, new material shows that the Adani Group has been violating Rule 19A of the Securities Contracts (Regulation) Rules (SCRR) of of 1957.The provision states that private listed companies must maintain a minimum public shareholding of 25 per cent, within specified periods. In this light, the plea states,"This Hon’ble Court in its judgment dated 03.01.2024 failed to appreciate that while the issue of over-invoicing may have not been proved, the aspect of Adani promoters investing into Adani group stocks in Indian stock market, has never been investigated and calls for a thorough probe...Unless the findings of the SEBI investigations are publicly reported it cannot be concluded that there has been no regulatory failure.".Last month, the Supreme Court had refused to issue any directions or interfere with the investigation of SEBI into the issue. It thus dismissed a batch of petitions seeking a probe by some alternative agency into allegations of fraud against the Adani Group of companies made in the Hindenburg Research report.The Court had stated that its power to enter into the regulatory domain of SEBI in framing delegated legislation was limited. It held that in the present case, there was no regulatory failure by SEBI and the market regulator cannot be expected to carry on its functions based on press reports..The Hindenburg Research report alleged that the Adani conglomerate had committed fraud by inflating its share prices. The report had led to a fall in the share value of various Adani companies, reportedly to the tune of $100 billion.The petitions before the apex court included one that alleged that changes to the SEBI Act had provided a 'shield and an excuse' for the Adani Group's regulatory contraventions and market manipulations to remain undetected.Subsequently, the Court had formed a committee headed by retired apex court judge, Justice AM Sapre to examine the controversy.The Supreme Court had also asked SEBI to independently investigate the matter a submit a report.The expert committee had in its report in May 2023 found no prima facie lapse on part of the markets regulator in the matter..The petitioner had meanwhile also alleged conflict of interest on the part of SEBI on the ground that Cyril Shroff, founder and managing partner of law firm Cyril Amarchand Mangaldas, was part of the SEBI's Committee on Corporate Governance while Shroff's daughter is married to Gautam Adani's son.The petitioners had also objected to the inclusion of Advocate Somasekhar Sundaresan (now a High Court judge) in the expert committee. They had contended that Sundaresan had appeared for the Adani Group as a lawyer in a matter before the SEBI.However, the Court in its judgment rejected the contentions of conflict of interest and ruled that SEBI was competent to probe the issue. It, therefore, had allowed SEBI to carry on with the probe and directed that the same be completed within three months..No regulatory failure by SEBI in Adani-Hindenburg row, reliance on unverified press reports cannot stand: Supreme Court.Jaiswal in her review plea has stressed that strict deadlines are needed to probe regulatory failures, and that the objections regarding conflict of interest of the committee members were flagged well in advance..The review petition has been filed through Advocate Neha Rathi.