The Supreme Court on September 9, 2026, clarified that the release of an escrow amount under the SEBI Buyback Regulations does not automatically protect a company from a separate inquiry into alleged fraud under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.
A Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan partly allowed SEBI’s appeals in the dispute involving Vedanta Limited and remanded the matter to the Securities Appellate Tribunal (SAT) for fresh consideration of the fraud allegation.
Background of the Case
The dispute arose from Vedanta Limited, formerly Cairn India Limited, announcing a proposed buyback of 17.09 crore equity shares at a maximum price of Rs. 335 per share. The total amount earmarked for the buyback was Rs. 5,725 crore.
The buyback period ran from January 23 to July 22, 2014. However, by the end of the period, the company had bought back around 3.67 crore shares for approximately Rs. 1,225.45 crore, substantially below the announced target.
SEBI’s Adjudicating Officer later alleged that the company had not placed sufficient buy orders despite several days when shares were available at or below the Rs. 335 price cap. In May 2021, penalties of Rs. 5.25 crore on the company and Rs. 15 lakh each on three individuals were imposed.
SAT, however, set aside those penalties in October 2023, holding that the alleged violations had not been established. It also noted that the market price remained above the buyback price for a substantial portion of the period and that the regulations did not prescribe a particular frequency or method for placing buy orders.
Supreme Court Examines the Escrow Issue
A key issue before the Supreme Court was whether SEBI’s earlier decision to release the cash escrow prevented it from separately examining allegations of fraud.
The Court rejected that argument.
It explained that Regulation 15B(8) deals with whether the escrow should be forfeited when the company fails to use the required amount for the buyback. It does not decide whether the company’s conduct amounted to fraud under the PFUTP Regulations.
"The mere release of the escrow does not create an automatic statutory bar to proceedings under the PFUTP Regulations because the release of the escrow is not necessarily equivalent to absence of fraud."
The Court therefore held that the two inquiries operate in different fields. Release of the escrow only addresses the consequences attached to the buyback requirement; it does not, by itself, determine whether fraudulent or manipulative conduct occurred.
Court Finds Serious Questions Over Trading Data
While settling the legal position on escrow, the Supreme Court did not itself decide whether Vedanta had committed fraud.
The Court found that the foundation of the Adjudicating Officer’s finding was historical trading data from the NSE and BSE. However, the respondents had disputed the accuracy of that data, and the Court identified discrepancies between figures appearing in SEBI’s investigation material and data supplied by the NSE.
For example, one NSE entry recorded more than 1.31 crore shares as available for sale at or below Rs. 335, while corresponding NSE data showed slightly more than 30 lakh shares. The Court said such discrepancies went to the root of the fraud finding.
The Court also noted an apparent contradiction between SEBI’s investigation reports: an earlier report had found no material impact on price or volume attributable to the buyback announcement, while a later report proceeded on substantially the same facts to allege fraud.
Court's Decision
The Supreme Court held that fraud cannot be established merely through allegations, conjectures or assumptions. The evidence must be assessed objectively and the conclusion must be supported on the balance of probabilities. It also said trading patterns should be considered along with other relevant circumstances, including communications, instructions and internal records where available.
The Court accordingly partly allowed SEBI’s appeals and remanded the matter to SAT for fresh adjudication on the question of fraud alone.
SAT has been directed to examine the conflicting trading data, consider relevant evidence and, if necessary, summon company officials, merchant bankers or other persons and require production of documents.
It has also been directed to render fresh findings on the fraud allegation within six months.
Case Details
Case Title: Securities and Exchange Board of India v. Vedanta Limited & Ors.
Case Number: Civil Appeal Nos. 25-26 of 2024
Judges: Justice J.B. Pardiwala and Justice K.V. Viswanathan
Decision Date: September 9, 2026
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