Adani-Hindenburg | 'We Can't Start With Presumption Of Regulatory Failure' : Supreme Court To Constitute Expert Committee
The Supreme Court on Friday said that it will pass orders to constitute an expert committee to review the regulatory mechanism in the light of the Adani-Hindenburg issue.The bench comprising Chief Justice of India DY Chandrachud, Justice PS Narasimha and JB Pardiwala however refused to accept the names proposed by the Central Government in a sealed cover for inclusion in the proposed...
The Supreme Court on Friday said that it will pass orders to constitute an expert committee to review the regulatory mechanism in the light of the Adani-Hindenburg issue.
The bench comprising Chief Justice of India DY Chandrachud, Justice PS Narasimha and JB Pardiwala however refused to accept the names proposed by the Central Government in a sealed cover for inclusion in the proposed committee. "We will select the experts and maintain full transparency. If we take names from the government, it would amount to a government constituted committee. There has to be full (public) confidence in the committee", CJI Chandrachud orally observed.
CJI also observed during the hearing, "We can't start with a presumption of regulatory failure".
Last Friday, the bench had sought the views of Centre & SEBI on measures to protect the Indian investors. Later, the Centre informed the Court that it was agreeable to the suggestion to form an expert committee to review the regulatory framework. However, Solicitor General of India requested that the remit of the committee should be defined in such a manner so as to not give an impression to foreign and domestic investors that there are inadequacies in the regulatory framework.
Centre submits sealed cover note
When the matter was taken today, Solicitor General of India Tushar Mehta submitted a sealed cover note regarding the remit of the proposed committee and also the members.
However, the bench said that instead of accepting the names given in Centre's sealed cover, the Court itself would constitute a committee so as to ensure transparency.
"We'd rather not accept the sealed cover suggestions. We want to ensure transparency. In case we take your suggestions from sealed cover, it automatically means the other party won't know and people will think it is a govt appointed committee. We want full transparency for protection of investors. We will form a committee. There will be a sense of confidence in the court", CJI Chandrachud said.
Court asks about the petitions
The bench then asked the petitioners in each case to present their points of view.
The PIL filed by Vishal Tiwari seeks the constitution of a committee headed by a retired Supreme Court Judge to investigate the contents of the Hindenburg Research Report.
The other petition is filed by Advocate ML Sharma and seeks to declare 'short-selling' as the offence of fraud. The said petition seeks investigation against Nathan Anderson, the founder of Hindenburg, "for exploiting innocent Investors via short selling under the garb of artificial crashing".
Advocate Prashant Bhushan appeared for another petitioner who was seeking probe against Adani group promoters based on Hindenburg report.
"Your prayers assume guilt Mr Bhushan", CJI Chandrachud said.
"Facts through Hindenburg report show that offshore funds were used and this effectively meant that percentage of shares held by promoters exceeded the SEBI regulations...Then- this is very important - What is the source of funds of the shell companies which have been allegedly used to invest large sums...", Bhushan submitted.
"Was LIC used to facilitate the price manipulation of Adani Shares?", he further asked.
The Court also heard a petition filed by Congress leader Jaya Thakur seeking investigation against Adani Group in the light of Hindenburg Research report. The plea also seeks probe into SBI and LIC investments in Adani shares. "You also start with the presumption of veracity of the report?", CJI asked Advocate Varun Thakur, lawyer of Jaya Thakur.
"We can't start with a presumption of regulatory failure", CJI Chandrachud said when Bhushan alleged that there was connivance on the part of regulators. "There is no iota of doubt that SEBI was involved, they allowed for shares to shoot up 40-50 times...", Bhushan submitted. Solicitor General objected to Bhushan's statements.
"SEBI and all regulators have discharged their duties. Nothing remains hidden", SG asserted.
When Bhushan attempted to suggest names of judges who can be included in the committee, the bench stopped him, saying that since it did not accept the Centre's suggestions, it can't accept petitioners' suggestions too.
After this exchange, the bench closed the matter for orders. The bench also rejected the suggestion made by some petitioners for including a sitting Supreme Court judge in the committee to monitor.
Case : Vishal Tiwari vs Union of India W.P.(C) No. 162/2023, Manohar Lal Sharma vs Union of India W.P.(Crl.) No. 39/2023, Anamika Jaiswal vs Union of India W.P.(C) No. 201/2023, Dr.Jaya Thakur vs Union of India W.P.(Crl.) No. 57/2023