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The Bombay High Court discharged Adani Enterprises Limited (AEL), its Chairman Gautam Adani, and Managing Director Rajesh Adani from a cheating case filed by the Serious Fraud Investigation Office (SFIO). The case, lodged in 2012, alleged artificial manipulation of AEL's share price, resulting in an unlawful gain of INR 388 crore. However, Justice R N Laddha held that the complaint failed to establish the essential elements of cheating or conspiracy under the Indian Penal Code. The Court also rejected SFIO's plea to delay the discharge order's implementation.
The Bombay High Court discharged Adani Enterprises Limited (AEL), its Chairman Gautam Adani, and Managing Director Rajesh Adani from a cheating case filed by the Serious Fraud Investigation Office (SFIO). The case, filed in 2012, had accused the Adani Group of unlawful manipulation of its share price, allegedly resulting in an illicit gain of INR 388 crore. Justice R N Laddha, presiding over the single-judge bench, concluded that the complaint lacked the essential ingredients necessary to constitute an offence of cheating under Section 420 of the Indian Penal Code (IPC). Advertisement
The SFIO's complaint, originally lodged in the Additional Chief Metropolitan Magistrate's court at Ballard Pier, Mumbai, implicated Triumph Securities Limited and ten others, including AEL and its key promoters. The investigative body had alleged a criminal conspiracy between Ketan Parekh and the Adani promoters to artificially inflate AEL's share prices by providing funds and shares to Parekh's entities. The purported manipulation allegedly enabled the accused to sell their holdings at high valuations, thus deceiving investors.
Despite these allegations, the Bombay High Court held that AEL could not be tried for manipulation as it was not a trading member on the stock exchange. No specific investor had claimed to be defrauded, nor had any public grievance been registered. The absence of an identifiable victim and proof of deception meant the offence of cheating could not be substantiated.
Justice Laddha's ruling underscored that "the presence of deception leading to wrongful loss and gain" was an essential requirement for invoking Section 420 IPC. Since no specific loss to investors had been demonstrated, the charges of cheating and conspiracy were unsustainable.
Furthermore, the High Court found no legal errors in the earlier discharge orders issued by the Ballard Pier Magistrate's Court in 2014 and 2015, which had cleared the Adanis of wrongdoing. Justice Laddha noted that the Mumbai Sessions Court had overstepped its jurisdiction in overturning those discharge orders in 2019, prompting the HC to quash the Sessions Court ruling.
The Court also commented on the scope of the SFIO's authority under the Companies Act of 1956, suggesting that it lacked legal standing to initiate IPC charges, though it left the final adjudication on this point open for future cases. While SFIO's counsel, Additional Solicitor General Anil Singh, requested a two-week stay on the discharge order to file an appeal in the Supreme Court, the HC declined the request.
The judgment reaffirms the legal principle that revisional courts are confined to evaluating the legality and propriety of lower court orders and should not interfere absent clear legal errors.
With this discharge, the Bombay High Court has effectively brought closure to a prolonged legal battle that spanned more than a decade. This decision marks a significant legal relief for the Adani Group, although the SFIO may yet seek recourse through an appeal to the Supreme Court in the days ahead.
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