Adani verdict: Onus now on Sebi to reinforce investor confidence

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review–one must wait for a ruling first to challenge it. The petitions were premature considering that the Securities and Exchange Board of India is yet to conclude all its investigations into the allegations on the Adani Group. The Supreme Court has rightly refused to intrude into what is manifestly the territory of the markets regulator, as well as other agencies and regulatory bodies charged with looking into charges of financial or accounting fraud.

It is only after these agencies and authorities have ruled on the matter that aggrieved parties can approach courts for relief. A three-judge bench headed by Chief Justice DY Chandrachud observed that such petitions that “rely on unverified and unrelated material tend to, in fact, be counterproductive", and warned that “this word of caution must be kept in mind by lawyers and members of civil society alike". The Supreme Court’s verdict is notable on another ground.

The petitions were, in essence, a ‘no confidence’ motion against Sebi’s regulatory and investigative processes. The SC has dismissed the petitions, observing that “no apparent regulatory failure can be attributed to Sebi based on the material before this Court. Therefore, there is prima facie no deliberate inaction or inadequacy in the investigation by Sebi".

Also, there have been allegations of conflict of interest against members of an SC panel that's also probing the matter, which the court rejected as “unsubstantiated". What the verdict does is to send a signal to investors–both domestic and foreign–that India has a sound regulatory framework in place for financial markets, as well as the necessary expertise to investigate complex and sophisticated transactions. What the verdict does not do, however, is