Gautam Adani, brother get court relief in Rs 388 crore cheating case

On Monday, the Bombay High Court cleared Gautam Adani, the chairman of Adani Enterprises Limited (AEL), and managing director Rajesh Adani from a case initiated by the Serious Fraud Investigation Office (SFIO) regarding alleged manipulation of AEL’s share prices.

Justice Rajesh N Laddha annulled a previous order from a sessions court that had denied the Adanis and AEL a discharge from this protracted case, which accused them of violating market regulations with alleged financial implications of Rs 388 crore.

The high court's decision followed an appeal from the Adanis and AEL against the sessions court's ruling. Their case was presented by senior advocates Amit Desai and Vikram Nankani, who argued that there was insufficient justification to pursue the case against them.

The case against Adani brothers

The case originates from a chargesheet submitted by the SFIO in 2012, which accused AEL and the Adani Group of colluding with stockbroker Ketan Parekh to manipulate share prices. Parekh is a prominent figure linked to India's largest stock market scandal that occurred between 1999 and 2000.

In 2014, a magistrate court cleared AEL and the Adani Group of the charges. However, this decision was reversed in November 2019 by a sessions court in Mumbai. Upon reviewing a revision plea, the court determined that the SFIO's investigation provided "prima facie" evidence of unlawful profits amounting to Rs 388.11 crore for the Adani Group promoters and Rs 151.40 crore for Ketan Parekh, stemming from the alleged manipulation of AEL shares.

Sessions judge DE Kothalikar concluded that there were adequate grounds to pursue legal action against the Adani Group. Subsequently, the high court issued a stay on the sessions court's ruling in December 2019, which was extended multiple times until the final decision was reached on Monday.

In February 2023, the high court asked why the SFIO, which is an agency under the Union Ministry of Corporate Affairs, was delaying the pursuance of the case. The court observed that there had been no hearing since February 10, 2022, when the interim stay was extended. The court asked whether the lack of action was due to the “scenario outside”.

The Adani Group was then under public scrutiny after US-based short-seller firm Hindenburg Research released a report accusing the conglomerate of “brazen stock manipulation and accounting fraud scheme" over decades.