Former chief justice of India Dr DY Chandrachud has issued a detailed legal opinion clearing Vedanta group and its subsidiaries, including Hindustan Zinc Ltd (HZL), of allegations raised by US-based Viceroy Research LLC. The opinion, commissioned by Vedanta and disclosed to the stock exchanges on 18th July, asserts that the group’s conduct complies with Indian laws and regulatory frameworks and finds no merit in the claims of fraud, governance failure, or regulatory breach made by Viceroy.
However, the legal opinion falls short in addressing the core allegations raised by Viceroy Research. Instead of engaging with the substantive financial concerns, the opinion focuses heavily on discrediting Viceroy’s background, research model and motivations. It relies on the mere existence of public disclosures and the Securities and Exchange Board of India (SEBI)’s regulatory framework to assert legitimacy, without scrutinising underlying transactions such as the brand fee arrangements, the Serentica investment, and Fujairah Gold exports.
Dr Chandrachud says, “Given the absence of verified evidence and the fact that much of the information in the (Viceroy) Report is drawn from public disclosures, it does not, on its face, disclose any credible basis for regulatory action, including investigations.”
"The elements required to establish defamation - both civil and criminal - are satisfied in this case, given that Viceroy has published public, reputationally damaging statements directly targeting the Querist (Vedanta). The report contains serious imputations such as ‘Ponzi scheme’ and ‘parasite’, which have caused harm to the Querist's business and reputation. In these circumstances, the Querist would be well placed to seek legal remedies, particularly in light of the Ebix Order of the Delhi High Court involving similar facts," the former chief justice stated in his legal opinion.
Viceroy Research had accused the Vedanta group of a range of serious improprieties, including funding unsustainable dividends through mounting debt, paying unjustified brand fees to promoter entities, and engaging in related-party transactions that erode shareholder value.
Earlier this month, Viceroy Research has levelled serious allegations against Vedanta Resources Ltd (VRL) and its Indian listed subsidiary, Vedanta Ltd (VEDL),
accusing the group of operating a ‘Ponzi-like structure’ driven by undisclosed liabilities, financial engineering, and relentless cash extraction. In another report, it claimed VEDL faces a US$5.6bn (billion) free cash-flow shortfall and alleges that its semiconductor subsidiary,
Vedanta Semiconductors Pvt Ltd (VSPL), is a sham entity used to route a Rs2,500 crore loan back to the parent, despite lacking genuine operations. Viceroy warned of a looming solvency crisis at the group level, though VEDL has responded by citing reaffirmed ratings from CRISIL and ICRA after independent evaluations.
However, in his independent analysis, Dr Chandrachud finds that all transactions referenced in the Viceroy report have been appropriately disclosed in line with applicable Indian laws, including SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, the Companies Act, and other relevant statutes. The opinion notes that Vedanta’s dividend declarations were within the legal limits approved by its board and that the brand fee agreements between HZL and VRL were duly authorised and transparently reported. The 3% brand fee—one of the key points of Viceroy’s criticism—is described in the legal opinion as a commercial decision that was made in accordance with established governance processes.
Regarding the Serentica Renewables investment, which Viceroy characterised as a zero-yield, non-voting, 30-year instrument meant to extract capital from HZL, the legal opinion concludes that the transaction was disclosed as a related-party investment and does not violate any legal or financial reporting requirement. Similarly, the exports of high-purity silver sand to Fujairah Gold, which Viceroy claimed were hidden or denied by HZL’s management, are stated to have been disclosed in the company’s annual reports.
Dr Chandrachud’s opinion stresses that the role of independent directors, board committees and shareholders was preserved in approving such transactions and there is no basis to assert that minority shareholder interests were bypassed. The report also dismisses the broader financial narrative put forth by Viceroy—of declining net worth, surging debt, and value extraction by promoters—as speculative and subjective. It notes that dissatisfaction with a company’s commercial strategy or payout policy does not constitute evidence of illegality or regulatory failure.
The legal opinion stops short of passing judgment on the accuracy of Viceroy’s financial forecasts or its analysis of cash flows and leverage. Instead, it focuses strictly on legal and regulatory compliance. Importantly, it clarifies that Viceroy’s claims appear to conflate Vedanta Limited’s listed Indian operations with offshore debt positions linked to VRL, thereby introducing ambiguity regarding the scope of its critique. Dr Chandrachud also notes that the opinion does not evaluate the financial soundness of business decisions, but reiterates that there is no indication of any act that would attract regulatory sanction.
However, the opinion does not examine the financial sustainability of Vedanta’s dividend policy, nor does it analyse the solvency or stability of its entities. It also overlooks the qualifications and roles of key board appointees and fails to clarify which instruments and entities are the focus of Viceroy’s short position. Overall, the opinion appears to be based largely on management’s representations and fails to dispute or investigate any of the detailed findings published by Viceroy.
Vedanta, in its regulatory filing, said it sought the opinion in light of 'serious concerns raised in the public domain' and to reassure stakeholders of its commitment to transparency and governance. “The legal opinion confirms that Vedanta has followed due process and regulatory compliance,” the company stated.
The opinion doesn’t address any of the actual financial concerns raised. It just focuses on discrediting the short-seller, which is beside the point. We want real answers! Indian companies’ fund is allegedly being siphoned off to feed a foreign company, and this legal opinion does nothing to reassure us Indian investors on that front.
This will enable swift action by SEBI