Adani Row: SC Suggests Formation Of Panel, Seeks SEBI Response On Ways To Protect Investors

The Supreme Court suggested formation of a committee of domain experts to put in place robust practices to protect investors.

A file photo of the Supreme Court

Source : PTI

The Supreme Court on Friday expressed concerns about protecting Indian investors in the wake of the Adani-Hindenburg row and sought the responses of Securities and Exchange Board of India (SEBI) and the Centre on ways to improve the regulatory mechanism. The Supreme Court fixed the next date of hearing on February 13.

A bench of Chief Justice of India DY Chandrachud and Justices PS Narasimha and JB Pardiwala also suggested formation of a committee of domain experts to put in place robust practices to protect investors.

The Supreme Court said Indian investors had suffered losses running into several lakh crores due to the fall in share prices of Adani Group companies following the Hindenburg report.

The stocks of Adani Group have taken a beating since US short-seller Hindenburg Research accused it of stock manipulation and accounting fraud. The Adani Group has denied any wrongdoing and has threatened to sue Hindenburg.

"It is said total loss by Indian investors is several lakh crores....How do we ensure they are protected...it is said 10 lakh crores. How do we ensure that this does not happen in future. What role should be envisaged for SEBI in future," The Bar and Bench quoted the CJI as saying.

The top court then ordered the SEBI to file a response by next Monday detailing how a more robust mechanism could be put in place to avoid such an event in future.

"The response can contain existing regulatory framework, the relevant causal factors, the need for putting into place robust mechanism to protect investors. If the union is ready to accept the suggestion, the necessary recommendation of the committee may be made. A brief note on legal and factual matrix may be filed by the Solicitor General (SG) by next Monday," the Supreme Court ordered.

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Solicitor General Tushar Mehta, appearing for SEBI, said that the trigger point of the issue happened beyond the jurisdiction of India.

"Today there is seamless capital flow...how do you ensure that investors are protected. Everybody is an investor now, small or big," the CJI replied.

The court, however, said it was not making any observation on the merits of the case as "the stock markets usually run on sentiments".

The bench said a robust mechanism was required to protect investors as there was seamless capital movement and the middle class was increasingly investing in the stock market.

The CJI then suggested setting up of a committee that can give inputs for modifying the statutory regulations to prevent a similar incident in future.

"One of the suggestion is to have some committee...We do not want to cast any doubt on the SEBI or the regulatory agencies. But the suggestion is to have a broader thought process so that some inputs can be obtained. And then the government can take a call as to whether some modification is required of the statute, whether a modification for the regulatory framework is required. Beyond a certain stage we won't enter into the policy domain, but there should be a mechanism that it doesn't happen in the future," the bench said.

The top court was hearing two public interest litigation (PIL) petitions on the Adani issue. One was filed by Advocate Manohar Lal Sharma seeking directions to conduct an inquiry and register a First Information Report (FIR) against founder of Hindenburg Research for its recent report on Adani Group. 

The second was filed by Advocate Vishal Tiwari, who sought an inquiry into the Hindenburg report by a committee headed by a retired judge of the top court.

(With inputs from agencies)