MUMBAI: Observing that a cheating case was not made out, Bombay HC Monday discharged Adani Enterprises Ltd (AEL), its chairman Gautam Adani and MD Rajesh Adani from a case of alleged share price manipulation.
Serious Fraud Investigation Office had filed a complaint in an alleged case of artificial and unlawful manipulation of the company’s share price. The SFIO case was that the alleged fraud in the Adani scrip led to an “unlawful gain of Rs 388 crore” to Adani Group.
HC in its judgment said: “A fundamental requirement for a cheating offence under Section 420, IPC, is presence of an element of deception, which leads to victim suffering from loss while accused gains wrongfully.” The court said that in the SFIO case “there is a conspicuous absence of any such allegations from an affected party”.
“Merely by asserting that the accused has made a wrong gain without demonstrating corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating under IPC,” HC said. With no substance to back the main offence, the ancillary offence of criminal conspiracy becomes “unsustainable”, HC noted.
Justice R N Laddha rejected a request from SFIO to suspend operation of the order for two weeks to enable it to appeal in SC. SFIO had lodged a complaint in 2012 and invoked Section 420 (cheating) and Section 120B (criminal conspiracy) of IPC against the firm and 10 other accused.
In 2014 and 2015, a Ballard Pier magistrate dropped the case against Adanis. But in 2019, sessions court set aside the magistrate court order. Aggrieved, in 2019, AEL and Gautam Adani, then 57, petitioned HC in appeal against the sessions court order. On Monday, HC quashed the sessions court order.
SFIO’s allegations were that “Ketan Parekh entered into a criminal conspiracy with AEL to artificially manipulate share price of AEL”. The other allegation was that the Adani entities gained unlawfully by providing funds to KP entities to artificially manipulate shares and offload their shareholding when prices were high.
Adani’s counsel argued that AEL cannot trade its shares on stock exchange, hence allegations of manipulation of shares by it are “devoid of merit”. Besides, Gautam and Rajesh Adani “can’t be tried vicariously in their capacity of chairman and MD” for the penal offences.
