Supreme Court Judge Recuses in Vedanta, Hindustan Zinc Probe PIL.

Vedanta, Hindustan Zinc Probe PIL Stalled as Second Supreme Court Judge Recuses

• Petitioner Claims SEBI, RBI Inaction on Vedanta Financial Irregularities

• Government Stake in HZL and BALCO at Risk, Warns PIL

• Fund Diversion and Regulatory Breaches

A second Supreme Court judge has recused from a PIL seeking a probe into alleged financial irregularities and fraud at Vedanta and Hindustan Zinc. The petition, based on a Viceroy Research report, claims regulatory inaction over accusations of fund diversion and manipulation, jeopardizing government stakes and public funds. With government stakes in Hindustan Zinc and BALCO at risk, the PIL warns of public fund jeopardy. The case awaits a new bench.

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Supreme Court Judge Recuses from PIL Seeking Probe into Vedanta, Hindustan Zinc Financial Irregularities

For the second time this month, a Supreme Court judge has recused from hearing a significant Public Interest Litigation (PIL) that demands an investigation into alleged financial fraud, price manipulation, and regulatory violations by Vedanta Ltd (VEDL), Hindustan Zinc Ltd (HZL), and their parent entity, Vedanta Resources Ltd (VRL).

Justice Sanjay Kumar stepped aside on Friday, following Justice K Vinod Chandran’s recusal on September 8. The case, which alleges serious corporate governance lapses impacting government stakes and public funds, will now be listed before a newly constituted bench for hearing.

Viceroy Research Report Allegations: Fraud, Fund Diversion, and Regulatory Breaches

The PIL, filed by advocate Shakti Bhatia, hinges on an explosive 87-page report published in July by US-based short-seller Viceroy Research LLC. Titled ‘Vedanta – Limited Resources’, the report accuses Vedanta Resources of operating as a “parasite” that systematically drains its Indian listed subsidiaries.

The Sprouts News Investigation Team (SIT) notes that the specific allegations include inflated asset valuations, diversion of funds through opaque related-party transactions, misuse of upstream dividends, and the use of complex corporate structures to conceal massive liabilities from investors and regulators.

Also Read: Bandra Court Issues Arrest Warrant for Dr. Ajay Keni in ₹600 Crore Property Scam.

Petitioner Corroborates Claims Using SEBI, MCA Filings; Alleges Regulator Inaction

Advocate Bhatia contends that he has independently verified key portions of the Viceroy report through meticulous analysis of MCA21 filings, SEBI disclosures, and Registrar of Companies (RoC) records. The petition argues that these alleged actions, if proven, constitute blatant violations of SEBI’s Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, 2003, and the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, alongside the Companies Act, 2013.

Despite complaints being filed with SEBI, the Reserve Bank of India (RBI), and the Ministry of Corporate Affairs (MCA) in July, the petitioner claims a concerning regulatory inertia has ensued.

Government Stake and Economic Repercussions at the Heart of the PIL

The litigation underscores a critical risk to public interest, given the Government of India’s substantial stake in these companies. The state holds a 29.54% shareholding in Hindustan Zinc and a 49% stake in Bharat Aluminium Company (BALCO). The PIL states, “Any irregularities will not only prejudice minority shareholders but also jeopardise government funds, causing major repercussions to the economy.” This elevates the case beyond a corporate governance issue to a matter of national financial security.

Vedanta’s Defense and the Path Forward for the Supreme Court

Vedanta Group has vehemently denied all allegations, characterising the Viceroy report as “malicious, baseless, and misleading.” The company previously sought and received a legal opinion from former Chief Justice of India DY Chandrachud, advising that it could pursue defamation proceedings against the short-seller.

With two consecutive recusals adding a layer of judicial complexity, the matter now awaits a hearing before a fresh Supreme Court bench. The outcome is highly anticipated by policymakers and investors alike, as it could dictate the future of regulatory oversight for major corporate entities in India. The Sprouts News Investigation Team (SIT) will continue to monitor developments in this pivotal case.