The funds have further sought a direction restraining the adjudicating officer from proceeding further until a proper opinion is issued after considering their replies

The Securities Appellate Tribunal (SAT) on Friday adjourned appeals filed by five offshore funds challenging the manner in which adjudication proceedings have been initiated by the Securities and Exchange Board of India (SEBI) for a detailed hearing on June 22.

The markets regulator’s counsel, senior advocate Chetan Kapadia, said they will file a short note within a week.

These five funds, LTS Investment Fund, Cresta Fund, Asia Investment Corporation (Mauritius), APMS Investment Fund and Albula Investment Fund, were named in the Hindenburg report from January 2023.

Senior advocate Zal Andhyarujina, appearing for the funds, argued that after receiving a response to a show-cause notice, an adjudicating officer is required to form and communicate an opinion on whether proceedings should continue, under Rule 4(3) of SEBI’s adjudication regulations.

“The short but important question raised here is whether the adjudicating officer, after issuing a show-cause notice and inviting a reply, is required under the rules to issue a preliminary opinion, giving reasons on whether he is to proceed further or not,” he submitted before the tribunal.

"The first thing he said is that I am not bound to do it. Secondly, he said I am not bound to give it to you," Andhyarujina said, adding that the officer subsequently provided reasons only after the funds approached SAT. Though these are merely a “mechanical reproduction” of the show-cause notice and did not satisfy the requirement contemplated under Rule 4(3), he said.

Interim relief

The funds have further sought a direction restraining the adjudicating officer from proceeding further until a proper opinion is issued after considering their replies.

To which SEBI’s counsel said that the regulator had followed the process prescribed under the rules but the funds "don't want the inquiry to proceed.”

"There are stages at which an opinion has to be formed," Kapadia said. The exercise of examining the material placed before them was conducted internally and had called them for a hearing, which also the funds had appealed in SAT “to bring an end to the matter,” he said.

Published on June 12, 2026