India court asks regulator to investigate Adani's related party dealings

A woman checks her mobile phone inside the premises of the Supreme Court in New Delhi

By Arpan Chaturvedi

NEW DELHI (Reuters) -India's top court on Thursday asked market regulator SEBI to investigate Adani Group for any lapses related to public shareholding norms or regulatory disclosures.

SEBI is already examining a Jan. 24 report by U.S. short seller Hindenburg Research which alleged the Adani Group improperly used offshore tax havens and manipulated stocks.

Seven listed Adani Group companies have since lost about $135 billion in value despite Adani Group denying any wrongdoing.

The Supreme Court asked SEBI to check "whether there has been a failure to disclose transactions with related parties", "whether there was any manipulation of stock prices" and whether public shareholding rules have been violated.

Hindenburg Research has alleged that overseas entities and shell companies were tied to Adani Group and "surreptitiously" owned stock in its listed firms, violating India's rules on public shareholdings.

It also had identified numerous "undisclosed related party transactions" by both listed and private Adani companies.

Adani in response said "all related party transactions are at arm's length, properly disclosed".

The Supreme Court ruling was announced by a three-judge bench, headed by Chief Justice of India D. Y. Chandrachud, which heard several public-interest litigations on losses investors have suffered.

Billionaire Gautam Adani welcomed the Supreme Court order.

"It will bring finality in a timebound manner. Truth will prevail," he said in a post on Twitter.

The court also formed a panel to be headed by a retired Supreme Court judge to examine how investor protection mechanisms can be strengthened.

The six-member panel, which is due to report back within two months, will include former chairman of State Bank of India O.P. Bhatt and prominent banker K.V. Kamath.

Adani has sought to calm investors and this week held a fixed-income roadshow in Singapore and Hong Kong. The group, according to sources, has told creditors it has secured a $3 billion loan from a sovereign wealth fund.

(Reporting by Arpan Chaturvedi in New Delhi and Nallur Sethuraman in Bengaluru; editing by Muralikumar Anantharaman and Jason Neely)