The Curious Case of Shortsellers and PILs

INDIA's capital markets have been attracting global investors and the increasing sophistication of trading.

- SHRIRAM SUBRAMANIAN

Yet, a troubling trend is emerging where a foreign short-seller releases a report, and almost immediately it is followed by a public interest litigation (PIL) in court. This has been noticed in 2023 with the Hindenburg report on the Adani group and in 2025 with the Viceroy report on the Vedanta group. This trend raises the question of whether the Supreme Court should be involved in issues of the capital markets that is already regulated by the Securities and Exchange Board of India (Sebi) and impacts listed companies, investors and the integrity of Indian capital markets.

In January 2023, just days ahead of a ₹20,000 crore follow-on public offer (FPO), Hindenburg Research released a report alleging violations of securities law by the Adani group of companies. The report triggered a chain reaction that led to a sharp erosion of shareholder wealth and raised concerns about banking sector exposure to the group. This was followed by multiple PILs, leading to a Supreme Court appointed committee. The committee ultimately made no adverse findings against the Adani group, while the SEBI was directed to continue its investigation in certain matters. But the damage had already been done.