SUPREME COURT DECLINES TO HEAR PIL DEMANDING INVESTIGATION INTO VICEROY RESEARCH’S ALLEGATIONS AGAINST VEDANTA GROUP:

The Supreme Court on Friday declined to entertain a Public Interest Litigation (PIL) that sought an investigation into allegations made by US-based short-seller Viceroy Research LLC against Vedanta Limited, Hindustan Zinc Limited, Vedanta Resources Limited, and their related entities. The bench comprising Justice P.S. Narasimha and Justice A.S. Chandurkar expressed its unwillingness to consider the matter, following which the petitioner, Shakti Bhatia, withdrew the plea.

In the PIL, Bhatia had urged the Court to direct the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Ministry of Corporate Affairs (MCA) to initiate a comprehensive inquiry into the affairs of the Vedanta Group companies. The petition was primarily based on a research report published on July 9, 2025, by Delaware-based investigative firm and short-seller Viceroy Research LLC. The report had alleged instances of fraud, financial manipulation, price rigging, and regulatory violations within the Vedanta Group.

According to the petitioner, regulatory authorities such as SEBI and RBI had failed to take action on complaints already lodged with them concerning the allegations raised in the Viceroy report. The petition emphasized that these agencies had a statutory responsibility to investigate such serious claims, particularly when they involved public and government money. Senior Advocate Gopal Sankaranarayanan, appearing for the petitioner, submitted that the relief sought was limited to ensuring that the relevant regulators discharged their statutory duties by examining the complaints and taking appropriate action. He argued that SEBI and RBI, as regulatory bodies, should at least respond to the representations made, investigate the matter, and issue a report clarifying whether the companies were in compliance with legal norms.

Opposing the PIL, Solicitor General Tushar Mehta contended that the plea was not bona fide and appeared to have been influenced by the foreign short-seller itself. He observed that there was a growing pattern wherein external entities published reports to manipulate the Indian stock market. He urged the Court not to entertain such petitions that could indirectly serve the interests of foreign market players.

After hearing both sides, the Supreme Court found no merit in proceeding with the matter and declined to entertain the petition. The bench’s decision effectively brought the proceedings to an end, with the petitioner opting to withdraw the PIL.

The petition had relied extensively on the contents of the Viceroy report, which alleged that Vedanta Resources and its holding companies had no operating assets but carried significant debt obligations amounting to USD 4.9 billion as of FY 2025. It was claimed that the parent company was heavily dependent on dividends from its subsidiaries, Vedanta Limited, Hindustan Zinc Limited, and BALCO—to service its debt. The report also alleged that Vedanta Limited had declared disproportionately high dividends to sustain this structure, which resulted in a depletion of its cash reserves.

Further, the petition pointed out that Vedanta Limited had advanced loans worth approximately USD 956 million (Rs.8,129 crore) to Vedanta Resources and its subsidiaries. These funds were allegedly utilized to purchase Vedanta Limited’s own shares from the open market, thereby increasing the promoter’s stake from 50% to 69%. The arrangement, according to the petitioner, violated SEBI’s unfair trade practice guidelines, as Vedanta Limited was both a lender and guarantor in the transaction.

The plea also alleged that several related-party transactions had been carried out without requisite approvals or disclosures, and that Hindustan Zinc Limited had undisclosed statutory dues. It contended that SEBI was obligated under Section 11(2A) of the SEBI Act to inspect any listed company where there existed a reasonable belief of unfair trade practices. The petition concluded that the silence of regulatory authorities despite grave public allegations necessitated judicial intervention, an appeal the Supreme Court ultimately declined to consider.