SC dismisses PIL seeking probe into Viceroy's claims against Vedanta Group

The apex court declines to entertain a plea based on Viceroy Research's report, questioning why foreign short-sellers should influence Indian market sentiment

The Supreme Court on Friday declined to entertain a public interest litigation (PIL) seeking a court-monitored probe into allegations made by US-based short-seller Viceroy Research against Vedanta Group companies, including Hindustan Zinc and Vedanta Resources, questioning the influence of foreign entities on Indian markets.

 

“Why are companies outside India so concerned about how we conduct our affairs and under what law?” a Bench of Justices P.S. Narasimha and A.S. Chandurkar remarked during the hearing.

 

The petition, filed by advocate Shakti Bhatia, was later withdrawn after Senior Advocate Gopal Sankaranarayanan informed the court that he would not press the matter. The Bench made it clear that if it were to issue notice, the case would be dismissed “with heavy costs.” A detailed order is awaited.

   

Centre flags foreign short-seller influence

 

Appearing for the Centre, the Securities and Exchange Board of India (Sebi), and the Reserve Bank of India (RBI), Solicitor General Tushar Mehta said that Viceroy was a short-seller and that the petitioner was merely a “name-lender.”

 

Mehta told the court there was a deliberate pattern by foreign short-sellers to destabilise Indian companies by releasing market-sensitive reports and amplifying their effects through litigation.

 

“There is a systematic pattern where outside agencies create reports and influence the Indian stock market,” Mehta submitted, referring to an email sent by Viceroy to the Sebi chairperson and other officials shortly after the plea was filed.

 

Petitioner cites limited intent, distinguishes Adani case

 

Sankaranarayanan clarified that the plea sought only a limited direction for Sebi and RBI to examine the allegations, not an endorsement of Viceroy’s findings. 

 

He also distinguished the case from the Hindenburg Research–Adani Group matter, in which the Supreme Court had constituted an expert committee to examine the issues raised.

 

Background: Allegations by Viceroy Research

 

In its 87-page report released in July, Viceroy alleged that Vedanta Resources Limited, the unlisted holding company of the group, had minimal operational activity and depended largely on cash flows from its listed arm, Vedanta Limited.

 

The report accused the conglomerate of regulatory violations, unauthorised foreign transfers, opaque auditor networks, and fund diversion through brand fees, while also flagging “excessive leverage and weak disclosure norms.”

 

Viceroy also targeted Group Chairman Anil Agarwal, claiming that several high-profile ventures — in semiconductors and nuclear power — had failed to materialise, with borrowed funds allegedly routed back to the parent company.

 

Vedanta has denied all allegations, while Viceroy claims to have submitted its findings to Sebi, RBI, and the Ministry of Corporate Affairs.

 

Multiple recusals precede hearing

 

The case saw multiple judicial recusals, with Justice Sanjay Kumar and later Justice K. Vinod Chandran stepping aside before the matter came up for hearing on Friday.

 

The episode echoes the January 2023 Hindenburg–Adani case, which led to a sharp erosion in the Adani Group’s market value before Sebi’s investigation ultimately cleared the conglomerate and its top executives of wrongdoing.