New Delhi : The Supreme Court on Friday refused to accept the Centre’s suggestions on the scope and composition of an expert committee to probe all aspects of the Adani-Hindenburg saga, which was submitted in a sealed cover, and said That he would appoint a committee on his own. In the interest of transparency.
Shares of Adani group companies tumbled after a January 24 report by short-seller Hindenburg Research alleging corporate wrongdoing by the Gautam Adani-led group triggered a political uproar over the billionaire’s alleged closeness to Prime Minister Narendra Modi. . Adani Group has termed all the allegations as baseless and defamatory.
Following the hearing of four public interest litigations (PILs) seeking an investigation against Hindenburg for causing significant harm to investors, over regulatory lapses, and an investigation into the Adani group based on the Hindenburg Report, the probe, headed by Chief Justice of India Dhananjay Y. Chandrachud reserved orders on the reconstitution and composition of the bench committee.
After examining a note submitted by Solicitor General Tushar Mehta in a sealed cover, the bench, also comprising Justices PS Narasimha and JB Pardiwala, said, “If we have to accept these suggestions, let us convey it to the other party.” Needed There should be transparency and trust in the process.”
The government proposed a six-member committee headed by a retired Supreme Court judge, comprising the Union Home Secretary and Director, Enforcement Directorate. The note required the committee to submit a report in eight weeks along with a preliminary report in a sealed cover considering the “volatile and emotion-driven” nature of the securities market. However, the government’s note clarified that the constitution of the committee would not be a reflection on the capability or capacity of the Securities Exchange Board of India (SEBI) or any other statutory body.
“If it is in a sealed cover, the petitioners will not be able to know which names we have accepted and which have not and they will say it is a government-appointed committee,” the bench said. In the past choosing a committee of its own to probe the Pegasus spyware controversy, where phones of prominent persons were allegedly kept under surveillance, the bench said, “We will not accept sealed cover suggestions in setting up a committee, Because we want to follow complete transparency. We will appoint a committee which will have more confidence.” The court also did not want to put those names in the public domain: “It would not be good for individuals. We will do it on our own.”
The Centre’s note also dealt with the proposed terms of reference for the committee with the primary task being “to ascertain the veracity of the allegations against Adani group companies in the Hindenburg Report.” Adani Group Acceptance of taking a “short position” in debt and derivatives, collecting details of all its transactions undertaken prior to the publication of the report, and assessing whether the transaction is within the penal, statutory and regulatory framework in India Come
The note added that the terms of reference of the committee would also include suggestions for strengthening the regulatory framework for better protection of investors in future. In addition, the note suggested an investigation into all short-selling shares of the Adani group “before and near the Hindenburg Report”.
The court also disagreed with Mehta’s contention that the report had no major market impact.
“You have said in your submission that the market effect was nil. It cannot be denied that lakhs of crores of rupees of investors have sunk.”
To be sure, there was a lot of loss in the notional wealth of the promoters, given the low public inflow of stock of Adani companies.
Advocate ML Sharma, the first to file the PIL, sought a probe against Hindenburg for conspiracy to harm the market and the economy and blamed SEBI for failing to protect investors.
Another petitioner Vishal Tiwari said that protecting investors was his prime concern while seeking a court-monitored probe into the revelations made in the Hindenburg Report. The other two petitions by Congress leader Jaya Thakur and law student Anamika Jaiswal have sought an inquiry against the Adani group over the allegations in the report.
The bench said, “Your prayer assumes guilt. What you are looking for is a proper investigation. We will close it for orders.”
The Solicitor General suggested making statutory probe agencies and SEBI part of the committee.
Advocate Prashant Bhushan, representing Jaiswal, said, “What is the point of having people against whom there are allegations.” The court remarked: “We cannot begin with a presumption of lapse of regulatory framework.”
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