New Delhi: In a relief to the Adani Group, the Securities and Exchange Board of India (SEBI) has ruled that certain transactions its companies made with three other firms and which Hindenburg Research had brought into question did not count as related-party transactions at the time and so never needed to be declared as such.

Hindenburg, which was a short-selling investment firm, had accused the Adani Group of “brazen stock manipulation”, an “accounting fraud scheme” and pulling the “largest con in corporate history” in a January 2023 report – charges the conglomerate has denied.

It had also suggested then that Adani firms' deals with companies named Adicorp Enterprises, Milestone Tradelinks and Rehvar Infrastructure should have been declared as related-party transactions but were not.

In Adicorp's case Hindenburg surmised that it “[had] simply been used to route funds from various Adani Group companies to publicly listed Adani Power”.

However, SEBI, which had looked into the matter, ruled in two orders on Thursday (September 18) that the deals did not qualify as related-party transactions as they were made at a time when Indian disclosure regulations had not yet undergone a crucial 2021 amendment.

The amendment, meant to go into effect beginning in 2022, broadened the remit of related-party transactions to include “transactions between a listed company/its subsidiary and [an] unrelated party, the purpose and effect of which is to benefit a related party of the listed entity/its subsidiary”.

As went into effect prospectively, “as per accepted legal jurisprudence” it “cannot apply to past transactions” such as the ones called into question by Hindenburg's report, SEBI whole-time member Kamlesh C. Varshney ruled.

The transactions cannot be ruled as manipulative, fraudulent or unfair either for three reasons, Varshney said: “(i) there is no allegation of siphoning off of money or diversion of fund; (ii) all the money has come back with interest before the start of the investigation; and (iii) the impugned transactions have not been held as related-party transactions”.

“Considering the above, the question of devolvement of any liability on Noticees [Adani firms] does not arise and hence the question of determination of quantum of penalty also does not require any deliberation,” said Varshney.

Conglomerate chairman Gautam Adani said the orders “reaffirmed” the Group's maintained position that Hindenburg's allegations were “baseless”.

“We deeply feel the pain of the investors who lost money because of this fraudulent and motivated report. Those who spread false narratives owe the nation an apology,” he added on X above a painting of the Indian flag.

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