SC Constitutes Committee To Review Regulatory Framework In Adani- Hindenburg Issue

The Supreme Court bench comprising the Chief justice of India DY Chandrachud and Justices PS Narasimha and JB Pardiwala on Thursday constituted an expert committee to review regulatory framework. The court also directed Securities and Exchange (SEBI) Board of India to complete the Adani- Hindenburg issue within a period of 2 months. The committee has been directed to file a report before the court stating the status of the investigation post that period.

The CJI noted that an overview of the petitions show that the public money is at risk and they seek to establish a committee. He said that the second petition asks for FIR against Hindenburg for short selling while the third petition seeks an enquiry into the matter, monitored by the court.

The court ordered SEBI to complete their probe within a period of 2 months and directed the body to also investigate whether there has been a violation of Section 19(a) of SEBI rules and whether there was a manipulation of stock prices.

The Chairman of SEBI has been requested by the bench to ensure that all relevant information is provided to the committee formed.

SEBI has been directed to further investigate if there is a failure to disclose transactions with related parties and other relevant information which concerns related party to SEBI in accordance with law.

The court also observed that there shall be a committee formed to protect the Indian investors and constituted a committee which will be headed by former SC judge Justice AM Sapre. Ither members of the committee are Mr OP Bhat, Justice JP Devdatt, Mr Nandan Nilakeni, Mr KV Kamathand Mr. Somasekharan Sudaresan.

In the last hearing, advocate ML Sharma sought direction from the top court to gag the media from reporting on the Adani – Hindenberg issue citing that the media was sensationalising the issue. Sharma is one of the four petitioners seeking directions to the SEBI and the Union Home Ministry for an investigation in the Hindenburg research.

The CJI however cleared during the hearing that the court will not issue an injunction to the media, ever. CJI also stated that the orders would pass shortly. The bench further reversed orders of February 17 to form an expert committee to review regulatory mechanism for the protection of investors. It must also be noted that the Adani Group has incurred huge loss as a result of the said report.

In the previous hearing as well, the bench refused to accept the names proposed by the centre in a sealed cover for inclusion in the proposed committee. The reason cited for non-acceptance was to maintain transparency. The bench said that they would appoint their own committee as accepting the names in the sealed cover would suggest that it is a committee appointed by the government. It was remarked by CJI Chandrachud that there has to be full confidence in the committee.

Case: Vishal Tiwari v. Union of India and ors