Adani-Hindenburg Case: SC sets up committee to probe fall in share prices

New Delhi: The Supreme Court on Thursday ordered setting up of a committee headed by former apex court judge AM Sapre to look into the fall in shares of Adani group companies along with various regulatory aspects of the stock market. The committee will have to submit its report within two months in a sealed cover. The Supreme Court has taken this major step in the wake of the recent steep fall in the shares of Adani group companies following the report by US-based short seller Hindenburg Research. Along with this, the court has directed the Securities and Exchange Board of India (SEBI) to complete its ongoing investigation in the matter within two months and submit a status report.

A bench of Chief Justice DY Chandrachud and Justices PS Narasimha and JB Pardiwala said the committee would assess the entire situation in the matter and suggest measures to create awareness among investors and strengthen the existing regulatory regime of stock exchanges. The bench directed the central government as well as the chairperson of financial statutory bodies, Securities and Exchange Board of India (SEBI), to extend full cooperation to the committee in the investigation. Former Supreme Court Justice O P Bhat and Justice J P Devdutt will also be members of the six committee. Other members of the committee include Nandan Nilekani, KV Kamath, Somasekaran Sundaresan.

The bench said the committee would suggest measures to create awareness among investors and also examine whether there was any regulatory lapse in dealing with the alleged violations of rules in the securities market context in the case of Adani Group or other companies. The committee will also take steps to strengthen the regulatory framework and ensure compliance with the existing regime to protect investor interest. The court asked SEBI to inform the committee appointed by the court about the steps taken during the ongoing investigation in the matter.

The bench, however, clarified that the purpose of setting up the committee was not to ‘adversely assess’ the working of regulatory agencies. The court has also asked the committee to investigate market regulations, short selling regulations or manipulation of share prices. The court said that the honorarium to be paid to the members of the committee would be decided by the chairperson and the cost would be borne by the central government. The Ministry of Finance will appoint a senior official as the nodal officer for logistic support to the committee.

The top court said it was of the view that it was appropriate to constitute an expert committee to assess the situation in order to protect the interest of investors from the recent volatility in the stock markets. The court has asked the SEBI chairperson to ensure that all necessary information is provided to the committee. “All agencies of the Central Government…agencies dealing with financial regulation, fiscal agencies and law enforcement agencies shall cooperate with the committee,” the court said.

Earlier, the top court, while reserving its order on February 17, refused to accept the Centre’s suggestions in a sealed cover on the proposed committee of experts. So far four PILs have been filed in the Supreme Court in this matter. The petitions have been filed by advocates ML Sharma, Vishal Tiwari and Congress leaders Jaya Thakur and Mukesh Kumar. It is worth mentioning that after the report of Hindenburg Research, the shares of Adani group companies have come down drastically. The report accused the Adani group of stock manipulation. However, the group has completely denied these allegations.