India’s market watchdog has shut the door on one of the most closely watched battles in corporate finance. The Securities and Exchange Board of India (SEBI) has cleared the Adani Group of allegations that it masked related-party transactions by routing loans through lesser-known intermediaries.
The controversy began after U.S. short-seller Hindenburg Research accused the conglomerate of using Milestone Tradelinks and Rehvar Infrastructure as pass-through entities to shuffle money between Adani Ports & SEZ, Adani Power, and Adani Enterprises. According to Hindenburg’s January 2023 report, the web of loans was nothing more than a disguised scheme.
SEBI, however, disagreed. After a year-long probe and a detailed review of financial statements, the regulator concluded that the loans issued between FY 2018–19 and FY 2022–23 were legitimate, fully serviced, and repaid with interest. The watchdog underlined a key point: the rules that broadened the definition of related-party transactions to include indirect dealings were only introduced in 2021 and made effective in 2023. Those provisions, it said, cannot be applied retroactively.
The show cause notice issued in early 2024 had suggested that the Adani Group’s use of Milestone and Rehvar was an artful dodge to avoid disclosing the deals as related-party transactions. It even accused top executives, including Gautam and Rajesh Adani, of engineering a covert scheme. The companies pushed back hard, maintaining that every rupee had been accounted for, no funds had been diverted, and no shareholder had been shortchanged.
SEBI’s order sided with the conglomerate. It noted that the original regulatory framework in force during the investigation years only covered direct related-party arrangements. Since the loans in question didn’t fit that definition, they couldn’t be treated as undisclosed related-party transactions. Nor could the transfer of money through Milestone and Rehvar, in itself, amount to fraud under the PFUTP Regulations, the watchdog said.
The order was blunt: no evidence of fraud, no misstatement of financials, no harm to investors. In short, the foundation of the allegations collapsed once the “related-party” charge didn’t stick.
With this ruling, SEBI has not only exonerated the Adani Group but also reaffirmed that new rules cannot be stretched backward in time to rewrite past conduct.
