This week in Indian law: Hindenburg Research published a report alleging fraud and stock manipulation by the Adani Group, triggering the most significant Indian securities market crisis since the 2009 Satyam scandal. Separately, the Supreme Court simplified the guidelines for executing living wills for passive euthanasia, making the 2018 framework practically workable. Multiple PILs were filed before the Supreme Court seeking court-monitored investigation of the Adani Group. 3 significant legal developments this week across supreme-court-judgments and securities-market.
Top story
Hindenburg Report Alleges Adani Group Fraud, Triggers Market Rout
Category: securities-market | Date: 24 January 2023 | Source: Hindenburg Research
US-based short-seller Hindenburg Research published a 106-page report on 24 January 2023 alleging that the Adani Group had engaged in stock manipulation and accounting fraud over decades through a network of offshore shell entities. The report, which disclosed that Hindenburg held short positions in Adani Group securities, triggered a catastrophic selloff. Adani Group companies collectively lost over USD 100 billion in market value. Adani Group published a 413-page rebuttal on 29 January denying all allegations. The Adani Enterprises FPO, despite being fully subscribed, was withdrawn on 1 February.
Why it matters: This episode raises fundamental questions about SEBI's regulatory oversight, the adequacy of India's securities disclosure framework, and the legality of activist short-selling. The Supreme Court's engagement through PIL petitions signals that the matter will have far-reaching regulatory consequences.
Read more: Veritect analysis
Court judgments
SC Simplifies Living Will Guidelines for Passive Euthanasia
Court: Supreme Court of India | Bench: Constitution Bench | Date: 24 January 2023
The Supreme Court modified its 2018 guidelines on passive euthanasia from Common Cause v. Union of India, significantly simplifying the procedure for creating and executing living wills (advance medical directives). The revised guidelines reduce the number of witnesses required, streamline the medical board approval process, and remove the mandatory involvement of a Judicial Magistrate at the initial stage.
Key point: Living wills for passive euthanasia are now practically executable after the Court removed several bureaucratic hurdles that had rendered the 2018 framework largely inoperative.
Regulatory updates
SC Takes Up Adani-Hindenburg Petitions
Date: 30 January 2023
Multiple Public Interest Litigations were filed before the Supreme Court seeking a court-monitored investigation into the Hindenburg allegations against the Adani Group. The petitions demanded that SEBI be directed to investigate allegations of stock manipulation, related-party transaction disclosure failures, and compliance with LODR norms. The Supreme Court took up the petitions on 30 January, signalling judicial engagement with the market crisis.
Key point: The Supreme Court's engagement through PIL proceedings transforms the Hindenburg-Adani matter from a market event into a potential landmark securities law case.
By the numbers
- USD 100+ billion — Market capitalisation lost by Adani Group companies in the week following the Hindenburg report
- 413 pages — Length of the Adani Group's rebuttal published on 29 January
- 6+ years — Duration for which the demonetisation validity question remained open before Week 1's resolution
Looking ahead
- February 1: Union Budget 2023-24 — Finance Minister Nirmala Sitharaman to present the last full Budget before the 2024 general elections.
- Early February: Supreme Court expected to pass directions on Adani-Hindenburg petitions, potentially constituting an expert committee.
- February 8: RBI Monetary Policy Committee meeting — sixth consecutive rate hike expected.
This is the Veritect Weekly Legal Roundup for Week 4 of 2023. For daily updates, visit our legal news page. Subscribe to receive this roundup every Monday morning.
Veritect provides this content for informational purposes and does not constitute legal advice.