Adani-Hindenburg Issue: Committee to be formed for better functioning of stock market, SEBI will submit report in sealed cover

The central government on Monday expressed its willingness to set up a committee to determine whether there is a need to amend the regulatory framework to protect Indian investors in the wake of the Adani-Hindenburg issue. Solicitor General of India Tushar Mehta said that I have instructions that SEBI and other agencies are fully equipped to take care of the situation not only in terms of governance but otherwise as well. However, responding to the suggestion of the court, the government has no objection in setting up a committee. But the decision of the committee will be very relevant as any inadvertent message to international investors or domestic investors that regulatory authorities need to be monitored by the committee may have some adverse effect on the flow of funds. We can provide names in a sealed cover with a possible suggestion of names of committee members. The Supreme Court will hear the Adani-Hindenburg case on February 17.

Chief Justice of India DY Chandrachud suggested that the SG submit a note on the committee’s proposed remit by Wednesday and agreed to hear the matter on Friday. The bench agreed to this and listed the matter on February 17, 2023. A bench comprising CJI DY Chandrachud, Justice PS Narasimha and Justice JB Pardiwala was considering two PILs filed by Vishal Tiwari and Manohar Lal Sharma, seeking probe into the Hindenburg Report. On February 10, the Court had expressed concern about protecting Indian investors from market volatility ensured after the publication of the Hindenburg Report and sought views of the Center and SEBI on measures to strengthen the regulatory framework.

During the hearing, the CJI had suggested setting up a committee. He had said that one of the suggestions is to form some committee… We do not want to cast any doubt on SEBI or the regulatory agencies. But suggestion is broad thought process so as to get some inputs. Then the government can consider whether some amendment is required in the law, whether the regulatory framework requires amendment. After a certain stage we will not enter the realm of policy but there should be a mechanism which does not do that. It will not happen in future. This is a call that the government has to take. We need to set up a mechanism that will ensure that this does not happen in the future.