Adani-Hindenburg Case: Supreme Court Sets Up A Panel; KV Kamath, Nilekani Among Members

The Supreme Court directed market regulator SEBI to investigate the allegations raised in the public interest petitions in the Adani Group-Hindenburg Research matter. The regulator has been asked to expeditiously conclude the investigation within two months and file a status report.

On Monday, the apex court also put together an independent committee led by Justice (retired) Abhay Manohar Sapre and asked it to give its suggestions in a sealed envelope within two months. Other members on the committee include OP Bhat, KV Kamath, Nandan Nilekani, Somashekhar Sundaresan, and retired Justice JP Devadhar.

"In order to protect Indian investors against volatility of the kind which has been witnessed in the recent past, we are of the view to constitute an expert committee".

The court also directed SEBI to investigate certain aspects of the issues raised in the present batch of petitions as a part of its ongoing investigation such as an inquiry into whether there had been a failure to disclose transactions with related parties and other relevant information which concerns related parties to SEBI and whether there was any manipulation of stock prices in contravention of existing laws.

CJI DY Chandrachud stated that the constitution of the expert committee does not divest SEBI of its powers or responsibilities in continuing with its investigation into the recent volatility in the securities market.

SEBI was also directed to apprise the expert committee of the actions as well as the steps that it has taken in furtherance of its ongoing investigation.

The apex court has asked SEBI to ensure that all requisite information is provided to the committee.

"The committee is at liberty to seek recourse to external expert advice in its work. It is requested to furnish its report in a sealed cover within two months," the apex court bench headed by Chief Justice of India DY Chandrachud said.

While constituting the committee, the court also laid down the remit of the committee:

• To provide an overall assessment of the situation, including the overall causal factors which had led to the volatility in the securities market in the recent past. 

• To suggest measures to strengthen investor awareness.

• To investigate whether there has been regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies. 

• To suggest measures to strengthen the statutory and regulatory framework and secure compliance with the existing framework for the protection of the investors.

The Adani-Hindenburg matter had reached the top court last month when two public interest litigation petitions were filed seeking a direction regarding allegations against the Adani Group. Soon after, another two petitions were filed by Congress leader Jaya Thakur and Anamika Jaiswal, and all four petitions were clubbed together.

The Supreme Court had previously voiced concern for investors when it was revealed that the Adani Group's investors had lost a total of Rs 10 lakh crore after short-seller firm Hindenburg had made its report public.

In its response to the court, the Securities and Exchange Board of India argued that India's existing regulatory structure is solidly built to guarantee the health and growth of the securities markets while also protecting investors' rights.

It had emphasised the robustness of the Indian market, saying that this is an isolated incident involving a single group of companies that has had no systemic or market-wide effects that would necessitate a review of the existing regulatory structure.

Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.