Adani-Hindenburg Issue : Centre Agrees To Supreme Court's Suggestion For Expert Committee To Review Regulatory Regime

The Union Government on Monday expressed its willingness to form a committee to determine whether a modification was required in the regulatory framework to protect Indian investors in the wake of Adani-Hindenburg issue. The Solicitor General of India Tushar Mehta said–"I have instructions that SEBI and other agencies are fully equipped, not only regime wise, but otherwise also to take care of the situation. However, responding to the suggestion which fell from the Court, the government has no objection for constituting a committee. But the remit of the committee would be very relevant because any unintentional message to international investors or domestic investors that the regulatory authorities need a monitoring by the committee may have some adverse impact on the flow of money. So, permit us to suggest the remit of the committee, with possible suggestion of the names of the committee members. We can provide names in a sealed cover because it may not be appropriate to discuss in open court hearing. They are people of some calibre".Chief Justice of India DY Chandrachud suggested that the SG gives a note on the proposed remit of the committee by Wednesday and agreed to hear the matter on Friday.The bench agreed to the same and listed the matter on 17th February 2023. The 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 concerns about protecting Indian investors from the kind of market volatility which ensured after the publication of the Hindenburg report, and sought the views of the Centre and the SEBI on the measures to strengthen the regulatory frameworks.In the hearing, CJI had put forth the suggestion to constitute a committee. He had said–"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. This is the call that the govt has to take.We need to put into place a mechanism which will ensure that this will not happen in the future".The PIL filed by Tiwari seeks the constitution of a committee under the head of a retired Supreme Court Judge to investigate the contents of the Hindenburg Research Report.The other petition is filed by Advocate ML Sharma and seeks to declare 'short-selling' as the offence of fraud. The said petition seeks investigation against Nathan Anderson, the founder of Hindenburg, "for exploiting innocent Investors via short selling under the garb of artificial crashing".It was on January 24 that US-based Hindenburg published its report accusing Adani group of widespread manipulations and malpractices to inflate its stock prices. Adani Group refuted the allegations by publishing a 413-page reply and even went to the extent of terming it as attack against India. Hindenburg shot back with a rejoinder, saying that 'fraud cannot be obfuscated by nationalism' and stood by its report.After the publishing of the Hindenburg report, Adani shares suffered a huge crash. The embattled group was also forced to recall its FPO, with the tumbling down of stock prices.Case Title : Vishal Tiwari vs Union of India W.P.(C) No. 162/2023, Manohar Lal Sharma vs Union of India W.P.(Crl.) No. 39/2023Click Here To Read/Download Order

Adani-Hindenburg Issue : Centre Agrees To Supreme Court's Suggestion For Expert Committee To Review Regulatory Regime

Padmakshi Sharma

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