Adani Row: Affidavit Triggers War of Words between SEBI and Finance Ministry
Moneylife Digital Team 16 May 2023
It looks like a war of words has broken out between the Union ministry of finance (MoF) and the market regulator over a rejoinder filed by the Securities and Exchange Board of India (SEBI). While SEBI told the Supreme Court that the allegations that it has been investigating the Adani group since 2016 are 'factually baseless',  the MoF says it stands by a reply given in the Lok Sabha on 19 July 2021 that SEBI is investigating some group companies of Adani group.
In a rejoinder affidavit submitted in the apex court, SEBI says it has not probed any Adani group company since 2016 and made a wrong statement during the previous hearing. It says, "...(the matter) pertains to the issuance of global depository receipts (GDRs) by 51 Indian listed companies, in respect of which investigation was conducted. However, no listed company of Adani group was part of the aforesaid 51 companies. Pursuant to the completion of the investigation, appropriate enforcement actions were taken in this matter. Hence the allegations that SEBI is investigating Adani since 2016 is factually baseless..."
According to SEBI, the first request to the regulator was made on 6 October 2020. It says a detailed note had been submitted to the expert committee appointed by the Supreme Court (SC) on steps taken, information received, and status of requests made with overseas regulators.
The bench, however, could not take up SEBI's plea on Monday due to lack of time and adjourned the matter for 10 July 2023. It automatically grants SEBI an additional two months' extension.
Meanwhile, responding to a tweet by Congress leader Jairam Ramesh, the MoF says, "The government stands by its reply in Lok Sabha on 19 July 2021 to question number 72, which was based on due diligence and inputs from all concerned agencies."
Mahua Moitra, member of Parliament (MP) from Trinamool Congress, had asked whether the foreign portfolio investors (FPIs) and/or Adani entities are under investigation by SEBI, income tax (I-T), enforcement directorate (ED), directorate of revenue intelligence (DRI), ministry of corporate affairs (MCA) for suspicious transactions.
In response, Pankaj Chaudhary, the minister of state for finance, told the lower house that "SEBI is investigating some Adani group companies with regard to compliance with SEBI regulations. Further, the DRI is investigating certain entities belonging to Adani group of companies under laws administered by it. As far as an investigation under the I-T act is concerned, disclosure of information regarding specific taxpayers is prohibited except as provided under Section 138 of the I-T act. No such investigation is going on in the ED."
Further, the minister stated, "In a matter pertaining to the issuance of GDR by certain Indian listed companies, SEBI vide order dated 16 June 2016 had directed depositories to freeze particular beneficiary accounts of certain FPIs including Albula Investment Fund Ltd, Cresta Fund Ltd and APMS Investment Fund Ltd. However, no order in respect of other beneficiary accounts of these FPIs has been passed by SEBI."
Last month, SEBI moved the SC seeking a six-month extension to complete its probe into Hindenburg allegations of stock manipulation by the Adani group.
During the hearing on Monday, a bench headed by chief justice DY Chandrachud and comprising justice PS Narasimha and justice JB Pardiwala says it accepts the petitioners' point that SEBI cannot take indefinitely long period to complete its probe and "we are not going to give them six months, we give them three months..." and added that it is not keen on accepting SEBI's request to grant a six-month extension to complete the probe.
The bench, however, could not take up SEBI's plea on Monday due to lack of time and adjourned the matter for 10 July 2023. It automatically grants SEBI an additional two months' extension.
Last week, the apex court indicated that it may grant SEBI three months more to complete its probe.
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