The Bombay High Court has discharged Adani Group Chairman Gautam Adani and Managing Director Rajesh Adani from allegations of market regulation violations amounting to ₹388 crore. This decision brings an end to a legal battle that began in 2012 when the Serious Fraud Investigation Office accused Adani Enterprises Limited and its promoters of criminal conspiracy and cheating.
The SFIO, a statutory agency responsible for investigating corporate fraud, initiated the case against AEL and its promoters, alleging manipulation of the company’s share prices leading to unlawful gains. The chargesheet filed by the SFIO claimed that the accused had engaged in fraudulent activities that resulted in a wrongful gain of ₹388 crore.
In 2019, a sessions court refused to discharge the Adanis from the case, prompting them to challenge the order in the Bombay High Court. The High Court, presided over by Justice R N Laddha, quashed the sessions court’s order, stating that no case of cheating or criminal conspiracy was made out against the accused. The court observed that the essential elements required to establish an offence of cheating under Section 420 of the Indian Penal Code were not present in this case.
The court noted that for an offence of cheating to be established, there must be an element of deception leading to a wrongful loss to the victim and a corresponding wrongful gain to the accused. In this instance, the court found no allegations from any affected party indicating that they had suffered a loss due to the actions of the accused. The court stated, “Merely by asserting that the accused has made a wrong gain without demonstrating the corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating under the IPC.”
The High Court further held that in the absence of substantive evidence to support the main offence of cheating, the ancillary offence of criminal conspiracy could not be sustained. Consequently, the court discharged Gautam Adani, Rajesh Adani, and AEL from all charges related to the case.
This ruling brings significant relief to the Adani Group, which has been under scrutiny for various financial dealings over the years. The detailed judgment is awaited, but the court’s decision effectively clears the Adani brothers and their company of any wrongdoing in this particular case.
The SFIO had alleged that AEL and its promoters were involved in artificial and unlawful manipulation of the company’s share prices, leading to substantial unlawful gains. However, the High Court found that the SFIO’s complaint lacked specific allegations from any affected party who had suffered a loss due to the alleged actions of the accused.
The court’s decision underscores the importance of concrete evidence and specific victim allegations in establishing offences of cheating and criminal conspiracy. Without such evidence, assertions of wrongful gain alone are insufficient to attract criminal liability under the relevant sections of the Indian Penal Code.
This case highlights the challenges faced by investigative agencies like the SFIO in prosecuting complex corporate fraud cases, especially when direct evidence of victimization is lacking. The High Court’s ruling emphasizes the necessity for thorough investigations that can substantiate claims of deception and resultant losses to specific victims.
The Adani Group, a multinational conglomerate with interests in various sectors including energy, resources, logistics, and agriculture, has welcomed the court’s decision. The exoneration of its top executives is expected to bolster the company’s reputation and provide a boost to its ongoing business operations.
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