The Supreme Court is set to deliver its verdict today on the dispute between Adani Group and Hindenburg Research, a US-based short-seller firm, over the allegations of financial fraud and manipulation by the Indian conglomerate. The apex court had reserved its judgment on December 15, 2020, after hearing the arguments of both parties.
What is the Adani-Hidenburg Dispute?
The Adani-Hidenburg dispute is a legal and financial battle that erupted in June 2020, when Hindenburg Research published a report titled “Adani: The House of Cards”, which accused Adani Group of inflating its assets, revenues, and profits, and of siphoning off funds through a complex web of shell companies and offshore entities. The report also claimed that Adani Group was involved in various scams and controversies, such as the coal import scam, the SEZ scam, the Mundra port scam, and environmental violations.
The report caused a sharp fall in the share prices of Adani Group companies, and also attracted the scrutiny of the regulators, such as the Securities and Exchange Board of India (SEBI), the Ministry of Corporate Affairs (MCA), and the Directorate of Revenue Intelligence (DRI). Adani Group denied the allegations, and termed the report as “malicious, false, and baseless”. Adani Group also filed a defamation suit against Hidenburg Research in the Bombay High Court, seeking ₹5,000 crore in damages, and an injunction to restrain the firm from publishing any further reports or statements against the group.
What are the Issues Before the Supreme Court?
The Supreme Court is hearing an appeal filed by Hidenburg Research, challenging the order of the Bombay High Court, which had granted an interim injunction in favour of Adani Group, and had restrained Hidenburg Research from publishing any further reports or statements against the group. Hidenburg Research contended that the order of the Bombay High Court was erroneous, and that it violated its right to free speech and expression, as guaranteed by Article 19(1)(a) of the Constitution. Hidenburg Research also argued that its report was based on credible and verifiable sources, and that it was in the public interest to expose the alleged fraud and manipulation by Adani Group.
Adani Group opposed the appeal, and defended the order of the Bombay High Court, stating that it was necessary to protect its reputation and goodwill, which were being tarnished by the false and defamatory allegations of Hidenburg Research. Adani Group also contended that Hidenburg Research had ulterior motives, and that it was acting at the behest of its competitors and rivals, who wanted to sabotage the growth and success of Adani Group.
The Supreme Court, after hearing the submissions of both the parties, had reserved its judgment on December 15, 2020. The judgment is expected to have a significant impact on the stock market, the regulatory framework, and the corporate governance standards in India.