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Informist, Friday, Oct. 10, 2025

 

--SC rejects PIL to probe Viceroy Research allegation vs Vedanta, parent co 

 

NEW DELHI – The Supreme Court on Friday refused to entertain a public interest litigation seeking a probe into US-based short-seller Viceroy Research's allegations that the UK-based Vedanta Resources was operating a "ponzi-like scheme" by systematically draining its publicly traded Indian subsidiary, Vedanta Ltd., of cash. Viceroy Research accused Vedanta Resources of financial misconduct, unsustainable debt, and using Vedanta's cash and assets to service its own debt. 

 

A Bench of Justice P.S. Narasimha and A.S. Chandurkar said they were not inclined to entertain the matter, after which the petitioner, an advocate Shakti Bhatia, withdrew the plea.

 

The petitioner had said that certain high-value transactions involving counterparties were neither declared as related parties nor subjected to shareholders' approval as mandated. If these are proven, it would constitute material breaches of the Companies Act, 2013, and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, amounting to financial fraud and harming minority shareholders. The petitioner sought a direction to SEBI and the Reserve Bank of India to act on complaints that had already been lodged with them regarding Vedanta and its parent company and to carry out their statutory duties of inquiry and investigation.

 

In July, Viceroy Research had flagged risks associated with Vedanta emanating from high debt of its parent Vedanta Resources. Viceroy Research had claimed Vedanta Resources is heavily indebted, financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors. The short-seller also alleged that the parent entity is a 'parasite' holding company that has no significant operations of its own, and is propped up entirely by cash extracted from its "dying" host Vedanta. 

 

In mid-July, the short-seller came up with more allegations against the group. It said the Agarwal family appears to control hidden shareholdings in Vedanta through undisclosed fronts such as the Bhadram Janhit Shalika Trust and its subsidiary, PTC Cables Pvt. Ltd. "Over INR 14.99 billion of Vedanta dividends were paid to entities we believe remain under control of the Agarwal family, and function more akin to political lobbying fronts for influence peddling, and to plug promoter vehicles with cash," Viceroy Research had then said. It claimed that Bhadram Janhit Shalika engages in political lobbying and keeps these lobbying efforts off Vedanta's official books. 

 

Since its first report in early July, Viceroy Research has released 15 separate reports against Vedanta Resources and the group companies, including allegations about upstreaming of funds through unsustainable dividends and brand fees, undertaking prohibited transactions from Vedanta to its parent company, and improper capitalisation of compulsory forest land acquisition costs at Vedanta group company ESL Steel. The short-seller had also raised allegations about Vedanta's deliberate underinvestment in core operations to fund parent-level debt service, incorrect disclosures about project timelines and capital expenditure, unfair related-party transactions, and use of sham trading operations to justify cross-border fund flows. 

 

At 1349 IST, shares of Vedanta were down 0.5% at INR 481.95 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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